Income Taxes

The provision for income taxes consists of the following (in thousands):



Year ended	August 26, 2017			August 27, 2016			August 29, 2015
Current:
Federal	$	37,027		$	54,654		$	65,656
Foreign	1,995			1,672			3,350
State	6,642			9,996			11,184
Total current	$	45,664		$	66,322		$	80,190

Deferred:
Federal	$	(520	)	$	10,803		$	(2,705	)
Foreign	123			(217		)	34
State	(340		)	1,437			(550		)
Total deferred	$	(737	)	$	12,023		$	(3,221	)

Total	$	44,927		$	78,345		$	76,969

The following table reconciles the provision for income taxes using the statutory federal income tax rate to the actual provision for income taxes:



	August 26, 2017		August 27, 2016		August 29, 2015
Income taxes at the statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes	3.5		3.5		3.5
Other	0.5		—		(0.3	)
Total	39.0	%	38.5	%	38.2	%

The tax effect of items giving rise to the Company’s deferred tax assets and liabilities is as follows (in thousands):



	August 26, 2017		August 27, 2016
Deferred Tax Assets
Payroll and benefit related	$	26,391	$	25,091
Insurance related	17,691		14,404
Environmental	9,945		10,465
Accrued expenses	4,542		1,418
Other	9,725		8,902
Total deferred tax assets	$	68,294	$	60,280

Deferred Tax Liabilities
Tax in excess of book depreciation	$	48,969	$	48,414
Purchased intangible assets	39,179		35,697
Rental merchandise in service	56,707		51,869
Other	25		—
Total deferred tax liabilities	144,880		135,980

Net deferred tax liability	$	76,586	$	75,700

The Company has evaluated its deferred tax assets and believes that they will be fully recovered. As a result, the Company has not established a valuation allowance.

As of August 26, 2017 and August 27, 2016, there was $3.6 million and $3.3 million, respectively, in total unrecognized tax benefits, which if recognized, would favorably impact the Company’s effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense which is consistent with the recognition of these items in prior reporting periods. As of August 26, 2017 and August 27, 2016, the Company had accrued a total of $0.1 million in interest and penalties, in its long-term accrued liabilities. For the years ended August 26, 2017, August 27, 2016 and August 29, 2015 the Company recognized a nominal expense in its Consolidated Statement of Income related to interest and penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



Balance at August 29, 2015	$	1,312
Additions based on tax positions related to the current year	424
Additions for tax positions of prior years	2,145
Statute expirations	(138		)

Balance at August 27, 2016	3,743
Additions based on tax positions related to the current year	490
Additions for tax positions of prior years	331
Statute expirations	(350		)

Balance at August 26, 2017	$	4,214

The Company has a significant portion of its operations in the United States and Canada. It is required to file federal income tax returns as well as state income tax returns in a majority of the U.S. states and also in the Canadian provinces of Alberta, British Columbia, Ontario, Saskatchewan, Quebec and New Brunswick. At times, the Company is subject to audits in these jurisdictions, which typically are complex and can require several years to resolve. The final resolution of any such tax audits could result in either a reduction in the Company’s accruals or an increase in its income tax provision, both of which could have a material impact on the consolidated results of operations in any given period.

All U.S. and Canadian federal income tax statutes have lapsed for filings up to and including fiscal years 2012 and 2009, respectively, and the Company has concluded an audit of U.S. federal income taxes for 2010 and 2011. With a few exceptions, the Company is no longer subject to state and local income tax examinations for periods prior to fiscal 2012. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.