11. Income Taxes

Income tax expense from continuing operations and effective income tax rates consist of the following:


	December 31,
	2015			2014			2013
Current taxes:
Domestic	$	16,036		$	8,424		$	4,982
Foreign		254			—			6
		16,290			8,424			4,988
Deferred taxes:
Domestic		1,656			2,238			2,347
Foreign		(100)			(371)			(347)
		1,556			1,867			2,000
Provision for income taxes	$	17,846		$	10,291		$	6,988
Income before income taxes
Domestic	$	50,692		$	27,984		$	19,954
Foreign		(1,585)			(1,721)			(1,767)
Total	$	49,107		$	26,263		$	18,187
Effective income tax rate		36.3	%		39.1	%		38.4	%

The effective income tax rate differs from the U.S. federal statutory income tax rate as follows:


	December 31,
	2015		2014		2013
Tax at federal statutory rate	35.0	%	35.0	%	34.0	%
Permanent differences	(1.6)		(2.9)		(1.7)
State income taxes	2.0		3.1		4.8
Foreign taxes	0.3		2.5		(1.6)
Other	0.6		1.4		2.9
Effective income tax rate	36.3	%	39.1	%	38.4	%

The components of the deferred tax assets and liabilities are as follows:


	December 31,
	2015		2014
Deferred tax assets:
Allowance for doubtful accounts	$	28	$	65
Inventory valuation		279		607
Accrued expense		927		372
Unrealized foreign exchange loss		652		634
Net operating loss carryforward		1,999		2,148
Goodwill		—		2,159
Deferred financing costs		1,564		—
Asset retirement obligation		179		292
Stock compensation		322		1,853
Total gross deferred tax assets		5,950		8,130
Valuation allowance		(3,717)		(4,120)
Net deferred tax assets		2,233		4,010
Deferred tax liabilities:
Plant, property and leasehold improvements		(5,881)		(4,238)
Intangibles		(18,962)		(11,903)
Prepaid expense		(1,463)		(1,045)
Total gross deferred tax liabilities		(26,306)		(17,186)
Net deferred tax liabilities	$	(24,073)	$	(13,176)

The net deferred tax assets and liabilities are reflected in the consolidated balance sheets as follows:


	December 31,
	2015		2014
Current deferred tax assets	$	—	$	634
Long-term deferred tax liabilities		(24,073)		(13,810)
Net deferred tax (liabilities)	$	(24,073)	$	(13,176)

The net change in the valuation allowance was a decrease of $403 and an increase $678 for the years ended December 31, 2015 and 2014, respectively. The change in the year ended December 31, 2015 related to foreign currency exchange rate fluctuations, partially offset by a change in net operating losses of foreign locations,. The change in the year ended December 31, 2014 related to net operating losses of a foreign location.

The Company has potential tax benefits associated with $1,999 of foreign operating loss carryforwards, which expire at various dates from 2024 through 2033. Due to the uncertainty of being able to recognize these loss carryforwards, the Company has provided a valuation allowance of 100% of the tax benefit.

At December 31, 2015, no provision has been made for U.S. federal and state taxes on cumulative foreign earnings from CPI Card Group-Europe Limited operations of approximately $2,707, which are expected to be indefinitely reinvested outside of the U.S. The U.S. deferred tax liability associated with indefinitely reinvested earnings and profits is not material.

The Company has analyzed its filing positions in all of the jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions, and based upon its review, determined there are no uncertain tax positions as of December 31, 2015 and 2014.

The Company is generally subject to potential federal and state examinations for the tax years after December 31, 2010 for federal purposes and December 31, 2009 for state purposes.