9. INCOME TAXES

Income tax expense components for the years ended December 31 are as follows (in thousands):

	2015			2014			2013
Current income taxes:
Federal	$	—		$	(2,350	)	$	6,726
State		—			(123	)		2,495

TOTAL		—			(2,473	)		9,221
Deferred income taxes:
Federal		29,722			36,620			24,954
State		4,233			5,216			3,554

TOTAL		33,955			41,836			28,508
Investment tax credit amortization		(143	)		(143	)		(237	)

TOTAL INCOME TAX EXPENSE	$	33,812		$	39,220		$	37,492

Deferred Income Taxes

Deferred tax assets and liabilities are reflected on our consolidated balance sheets as follows
(in thousands):

	December 31,
Deferred Income Taxes	2015		2014
NET DEFERRED TAX LIABILITIES	$	396,542	$	358,252

Temporary differences related to deferred tax assets and deferred tax liabilities are summarized as follows (in thousands):

	December 31,
Temporary Differences	2015		2014
Deferred tax assets:
Plant related basis differences	$	27,347	$	25,349
Net operating loss (NOL)		9,055		22,000
Regulated liabilities related to income taxes		13,142		13,350
Disallowed plant costs		1,699		1,754
Gains on hedging transactions		1,195		1,260
Pensions and other post-retirement benefits		—		1,175
Carry forward of income tax credit		8,675		6,367
Other		1,550		1,633

Total deferred tax assets	$	62,663	$	72,888

Deferred tax liabilities:
Depreciation, amortization and other plant related differences	$	382,897	$	363,337
Regulated assets related to income		38,615		37,180
Loss on reacquired debt		3,572		3,828
Amortization of intangibles		10,248		9,168
Pensions and other post-retirement benefits		7,112		—
Deferred construction accounting costs		5,711		6,082
Other		11,050		11,545

Total deferred tax liabilities		459,205		431,140

NET DEFERRED TAX LIABILITIES	$	396,542	$	358,252

Effective Income Tax Rates

The difference between income taxes and amounts calculated by applying the federal legal rate to income tax expense for continuing operations were as follows:

Effective Income Tax Rates	2015			2014			2015
Federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Increase (decrease) in income tax rate resulting from:
State income tax (net of federal benefit)		3.1			3.1			3.1
Investment tax credit amortization		(0.2	)		(0.1	)		(0.2	)
Effect of ratemaking on property related differences		(1.4	)		(1.7	)		(1.1	)
Other		0.9			0.6			0.3

EFFECTIVE INCOME TAX RATE		37.4	%		36.9	%		37.1	%

We do not have any unrecognized tax benefits as of December 31, 2015. We did not recognize any significant interest or penalties in any of the periods presented. We do not expect any significant changes to our unrecognized tax benefits over the next twelve months.

The "Protecting Americans from Tax Hikes" Act (the "Act") was signed into law on December 18, 2015. The Act restored several expired business tax provisions, including bonus depreciation for 2015. Because of the reinstatement of bonus depreciation, we anticipate making no material income tax payments in 2016.

We generated $74.1 million of tax NOLs during 2014, mainly due to bonus depreciation. We intend to carry forward these tax NOLs, which, if unused, will expire in 2034. We estimate that we will utilize approximately $38.0 million of the 2014 tax NOLs on our 2015 return when filed. As of December 31, 2015, we estimate there is $13.5 million of deferred tax assets remaining to be utilized related to the tax NOLs. A portion of the deferred tax assets related to the tax NOLs is recorded as a receivable on the balance sheet in anticipation of income tax payment refunds.

In 2010, we received $17.7 million of investment tax credits based on our investment in Iatan 2, which, if unused, will expire in 2030. We utilized $9.0 million of these credits on our 2013 tax return. Due to the passage of the Act, we estimate we will not be able to use the remaining credits on our 2015 tax return, but expect to use them to offset future income tax liabilities. The tax credits will have no significant income statement impact because they will flow to our customers as we amortize the tax credits over the life of the plant.

On September 13, 2013, the IRS and the Treasury Department released final regulations under Sections 162(a) and 263(a) on the deduction and capitalization of expenditures related to tangible property. These regulations applied to tax years beginning on or after January 1, 2014, and we filed a Form 3115 with the IRS to change our tax accounting method to comply with the regulations. As a result, we deducted approximately $29 million on our 2014 income tax return under IRS Code Section 481(a) as an adjustment required by the change in tax accounting method.

Our 2014 income tax return included another tax accounting method change regarding the deductibility of the Voluntary Employee Benefit Association (VEBA) plan activity. As a result, we deducted approximately $14 million as an adjustment required by the change in tax method of accounting. These changes did not have a material impact on the effective tax rate.