Note 10. Income Taxes

The provision for income taxes consists of the following for the years ended December 31:



(in thousands)
	2017		2016			2015
Current income tax expense	$	81,689	$	109,727		$	106,155
Deferred income tax expense (benefit)	26,912		(2		)	(14,584		)
Other income tax expense ⁽¹⁾	10,095		—			—
Income tax expense	$	118,696	$	109,725		$	91,571


(1)	The income tax expense for 2017 was impacted by the re-measurement of our deferred tax assets and liabilities due to the enactment of the TCJA on December 22, 2017, which reduced the corporate tax rate from 35% to 21% effective January 1, 2018.

A reconciliation of the provision for income taxes, with amounts determined by applying the statutory federal income tax rate to pre-tax income, is as follows for the years ended December 31:



(in thousands)
	2017			2016			2015
Income tax at statutory rate	$	110,493		$	112,032		$	93,187
Change in tax rate	10,095			—			—
Tax-exempt interest	(2,278		)	(2,270		)	(2,285		)
Other, net	386			(37		)	669
Income tax expense	$	118,696		$	109,725		$	91,571

The change in tax rate represents the tax effect of the re-measurement of deferred tax assets and liabilities due to the enactment of the TCJA. Income tax expense increased by $10.1 million related to the TCJA, which included an increase of $19.9 million related to the re-measurement of our net deferred tax asset partially offset by a deferred tax benefit of $9.8 million primarily related to the acceleration of pension contributions.

Income tax amounts are estimates based on our initial analysis and current interpretation of this legislation. Given the complexity of the legislation, anticipated guidance from the U.S. Treasury, and the potential for additional guidance from the SEC or the FASB, these estimates may be adjusted during 2018.

Temporary differences and carry-forwards, which give rise to deferred tax assets and liabilities, are as follows for the years ended December 31:



(in thousands)
	2017 ⁽¹⁾		2016 ⁽¹⁾
Deferred tax assets:
Other employee benefits	$	14,092	$	19,106
Pension and other postretirement benefits ⁽²⁾	22,758		65,241
Allowance for management fee returned on cancelled policies	3,024		4,795
Other	812		81
Total deferred tax assets	40,686		89,223
Deferred tax liabilities:
Depreciation	10,204		18,493
Prepaid expenses	5,568		8,120
Limited partnerships	4,509		5,597
Unrealized gains on investments	856		1,657
Other	159		1,467
Total deferred tax liabilities	21,296		35,334
Net deferred tax asset	$	19,390	$	53,889


(1)	Deferred tax balances were tax effected at 21% in 2017, the corporate tax rate effective January 1, 2018, as a result of the enactment of the TCJA on December 22, 2017. For 2016, balances were tax effected at the then effective tax rate of 35%.


(2)	Decrease in tax assets of pension and other postretirement benefits are primarily due to the $39.9 million of unplanned additional contributions in 2017, as well as accelerated contributions in 2018. We contributed $40 million in January 2018 and plan to contribute an additional $40 million in April 2018.

We had no valuation allowance recorded at December 31, 2017 or December 31, 2016. At December 31, 2017, we had an uncertain tax position of $2.3 million, for which a current liability was recorded. As a related temporary tax difference was also recognized, there was no impact to our results of operations or financial position. We recognized interest of $0.1 million related to this uncertain tax position in income tax expense. The IRS has examined our tax filings through tax year ended 2012. We are currently not under IRS audit, nor have we been notified of an upcoming IRS audit.

We are the attorney-in-fact for the subscribers (policyholders) at the Exchange, a reciprocal insurance exchange. In that capacity, we provide all services and facilities necessary to conduct the Exchange's insurance business. Indemnity and the Exchange together constitute a single insurance business. Consequently, we are not subject to state corporate income or franchise taxes in states where the Exchange conducts its business and the states collect premium tax in lieu of corporate income or franchise tax, as a result of the Exchange's remittance of premium taxes in those states.