Income before income taxes includes income from foreign operations of $10,092,000, $8,017,000 and $8,005,000 for 2020, 2019 and 2018, respectively.

	Fiscal Years
(In thousands)	2020			2019			2018
Current
Federal	$	11,553		$	16,498		$	16,487
Foreign		1,873			1,523			1,624
State		4,597			6,554			6,667
		18,023			24,575			24,778
Deferred
Federal		(2,766	)		(1,727	)		(2,604	)
State		(873	)		(1,118	)		(1,111	)
		(3,639	)		(2,845	)		(3,715	)
Total	$	14,384		$	21,730		$	21,063

The Company’s effective tax rate differs from the statutory federal tax rate of 21% as shown in the following schedule:

	Fiscal Years
(In thousands)	2020			2019			2018
Tax at federal statutory rate	$	20,357		$	21,880		$	19,597
State taxes, net of federal benefit		2,942			4,129			4,391
Divestiture of foreign subsidiary		46			956			—
Nondeductible officer compensation		907			759			—
Non-deductible expenses		118			345			335
Non-deductible stock-based compensation		(14	)		2			20
Excess tax benefit from equity incentive plans		(9,725	)		(6,394	)		(3,310	)
Difference between statutory rate and foreign effective tax rate		(486	)		(341	)		(217	)
Other		239			394			247
Tax expense	$	14,384		$	21,730		$	21,063

Effective tax rate		14.8	%		20.9	%		22.6	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at January 1, 2021 and January 3, 2020 are presented in the following schedule:

	Fiscal Years
(In thousands)	2020			2019
Deferred tax assets:
Accrued liabilities and allowances	$	16,841		$	15,658
Deferred compensation plan		31,619			28,463
Operating leases		5,758			6,867
Total deferred tax assets	$	54,218		$	50,988

Deferred tax liabilities:
State taxes	$	(1,969	)	$	(1,624	)
Deductible goodwill		(2,091	)		(2,104	)
Operating leases		(5,758	)		(6,867	)
Property, equipment and leasehold improvements		(81	)		(84	)
Unrealized gain of deferred compensation plan assets		(3,545	)		(2,339	)
Divestiture of foreign subsidiary		—			(956	)
Other		(235	)		(193	)
Total deferred tax liabilities		(13,679	)		(14,167	)
Net deferred tax assets	$	40,539		$	36,821

Management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets.

The Company is entitled to a deduction for federal and state tax purposes with respect to employees’ stock award activity. The net deduction in taxes otherwise payable arising from that deduction has been recorded as an income tax benefit. For 2020, 2019 and 2018, the net deduction in tax payable arising from employees’ stock award activity was $12,258,000, $8,067,000 and $4,154,000, respectively.

The Company and its subsidiaries file income tax returns in the United States federal jurisdiction, California and various other state and foreign jurisdictions. The Company is no longer subject to United States federal income tax examination for years prior to 2017. The Company is no longer subject to California franchise tax examinations for years prior to 2016. The California Franchise Tax Board is currently examining the Company’s 2017 and 2018 returns. With few exceptions, the Company is no longer subject to state and local or non-United States income tax examination by tax authorities for years prior to 2016.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at December 28, 2018	$	1,748,000
Additions based on tax positions related to the current year		515,000
Reductions due to lapse of statute of limitations		(340,000	)
Balance at January 3, 2020	$	1,923,000
Additions based on tax positions related to the current year		275,000
Reductions due to lapse of statute of limitations		(325,000	)
Balance at January 1, 2021	$	1,873,000

Unrecognized tax benefits are included in other liabilities in the accompanying balance sheet. To the extent these unrecognized tax benefits are ultimately recognized, they will impact the effective tax rate by $1,514,000 in a future period. There are no uncertain tax positions whose resolution in the next 12 months is expected to materially affect operating results.