
	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Federal:
Current	$	(29,449)	$	(982)	$	5,162
Deferred	(3,494)		567		(751)
Federal income tax expense (benefit)	(32,943)		(415)		4,411
State:
Current	(403)		241		1,383
Deferred	(150)		(124)		(296)
State income tax expense (benefit)	(553)		117		1,087
Total income tax expense (benefit)	$	(33,496)	$	(298)	$	5,498

The actual income tax expense (benefit) differs from the “expected” income tax expense (benefit) (computed by applying the combined applicable effective federal and state tax rates to income before income tax expense) as follows:


	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Computed expected tax expense provision, at federal rate	$	(23,447)	$	150	$	4,244
State tax, net of federal tax benefit	(3,157)		(122)		761
Tax-exempt interest	(5)		(3)		(134)
Income subject to dividends-received deduction	(26)		(34)		(13)
Goodwill impairment	2,309		—		—
Return to provision	(3,407)		(307)		158

Executive compensation	41		230		436
Meals and entertainment	13		43		28
Uncertain tax position	(179)		(203)		—
Rate difference on NOL carryback	(8,785)		(113)		—
Change in valuation allowance	2,968		—		—
Other	179		61		18
Total income tax expense (benefit)	$	(33,496)	$	(298)	$	5,498

In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act contains several relief provisions for corporations and lifts certain deduction limitations originally imposed by the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) signed into law on December 22, 2017. The CARES Act, among other things, includes temporary changes regarding the prior and future utilization of net operating losses (“NOL”), temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes and the creation of certain refundable employee retention credits. The Company utilized the NOL provision in the current year.

Our effective income tax rate is the ratio of income tax expense (benefit) over our income (loss) before income taxes. For the years ended December 31, 2020, 2019 and 2018, the effective income tax rate was 30.0%, (41.8)% and 27.2%, respectively. Differences in the effective tax and the statutory Federal income tax rate of 21% in 2020, 2019 and 2018, are driven by state income taxes and anticipated annual permanent differences, including estimates for tax-exempt interest, dividends received deduction, executive compensation as well as the NOL provision in the current year, as discussed above.

As of December 31, 2020, we had NOL carryforwards for Federal tax purposes of $11.1 million. As of December 31, 2020, we had NOL carryforwards for state tax purposes of $73.0 million expiring between 2037 and 2040 and $12.0 million that do not expire. The amount and timing of realizing these NOL carryforwards depend on future taxable income and limitations imposed by tax laws.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense (benefit) in the consolidated statements of operations and statements of comprehensive income (loss). A reconciliation of these uncertain tax positions was as follows:


	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Balance at January 1	$	382	$	585	$	585
Increases/(decreases) for uncertain tax positions taken during the prior years	(179)		(203)		—
Balance at December 31	$	203	$	382	$	585

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. Significant components of the Company’s deferred income tax asset (liability), net include the following:


	As of December 31,
	2020		2019
	(In thousands)
Deferred income tax assets:
Unearned premiums	$	5,611	$	10,232
Unpaid losses and loss adjustment expenses	581		1,596
Accrued expenses	236		216
Net operating loss carryforwards	5,350		2,095

Share-based compensation	232		161

Depreciation and amortization	412		—
Lease liability	1,783		1,655
Other	69		23
Gross deferred income tax assets	14,274		15,978
Valuation allowance	(2,968)		—
Total deferred income tax assets	11,306		15,978

Deferred income tax liabilities:
Deferred acquisition costs and other	(6,387)		(12,703)
Depreciation and amortization	—		(1,679)
Unrealized gains on investment securities	(2,865)		(3,270)
Lease asset	(1,783)		(1,655)
Other	(213)		(257)
Total deferred income tax liabilities	(11,248)		(19,564)

Deferred income tax asset (liability), net	$	58	$	(3,586)

The deferred income tax asset (liability), net along with income tax receivable, net is included in current and deferred income taxes, net on our Consolidated Balance Sheets.