Note 8, Income Taxes:

On December 22, 2017, the President signed into Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act contains significant changes to corporate taxes, including a permanent reduction of the corporate tax rate from 35% to 21% effective January 1, 2018. The Tax Act’s other major changes applicable to Havertys include the elimination of certain deductions and an enhanced and extended option to claim accelerated depreciation deductions on qualified property.

We remeasured deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 25%. At December 31, 2017, we recorded an additional expense of $5,868,000 for the effects on our existing deferred tax balances related to the remeasurement of our deferred tax balance.

Income tax expense (benefit) consists of the following:

(In thousands)	2019			2018			2017
Current
Federal	$	7,701		$	8,422		$	14,239
State		1,849			2,118			2,350
		9,550			10,540			16,589
Deferred
Federal		(2,217	)		(232	)		5,829
State		(474	)		(207	)		(270	)
		(2,691	)		(439	)		5,559
	$	6,859		$	10,101		$	22,148

The differences between income tax expense in the accompanying Consolidated Financial Statements and the amount computed by applying the statutory Federal income tax rate are as follows:

(In thousands)	2019			2018			2017
Statutory rates applied to income before income taxes	$	6,032		$	8,486		$	15,129
State income taxes, net of Federal tax benefit		1,149			1,616			1,306
Net permanent differences		228			220			95
Other		(132	)		(221	)		(250	)
Leases		(418	)		—			—
Tax Act, net impact		—			—			5,868

	$	6,859		$	10,101		$	22,148

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The amounts in the following table are grouped based on broad categories of items that generate the deferred tax assets and liabilities.

(In thousands)	2019		2018
Deferred tax assets:
Accounts receivable	$	545	$	530
Property and equipment		10,517		7,584
Lease Liabilities		44,751		—
Leases		—		4,135
Accrued liabilities		9,386		8,172
Retirement benefits		504		266
Other		50		56
Total deferred tax assets		65,753		20,743

Deferred tax liabilities:
Inventory related		7,912		7,649
Right-of-use lease assets		44,152		—
Other		491		550
Total deferred tax liabilities		52,555		8,199
Net deferred tax assets	$	13,198	$	12,544

We review our deferred tax assets to determine the need for a valuation allowance. Based on evidence, we conclude that it is more-likely-than-not that our deferred tax assets will be realized and therefore a valuation allowance is not required.

We file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With respect to U.S. federal, state and local jurisdictions, with limited exceptions, we are no longer subject to income tax audits for years before 2015.

Uncertain Tax Positions

Interest and penalties associated with uncertain tax positions, if any, are recognized as components of income tax expense. No amounts for uncertain tax positions were recorded for the years currently open under statute of limitations.