8. INCOME TAXES

The provision for income tax expense for the years ended December 31, 2016, 2015 and 2014 is as follows:



	Year Ended
	December 31,
	2016		2015		2014
	(in thousands)
Federal:
Current	$	5,076	$	15,523	$	16,659
Deferred		(2,771)		6,118		1,059
Federal income tax expense		2,305		21,641		17,718
State:
Current		674		2,489		2,204
Deferred		(296)		623		186
State income tax expense		378		3,112		2,390
Total income tax expense	$	2,683	$	24,753	$	20,108

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



	Year Ended
	December 31,
	2016		2015		2014
	(in thousands)
Computed expected tax expense provision, at federal rate	$	957	$	22,829	$	19,887
State tax, net of federal tax benefit		85		2,291		1,696
Tax-exempt interest		(571)		(445)		(312)
Income subject to dividends-received deduction		(219)		(109)		(136)
Meals and entertainment		130		-		-
Return to provision and rate changes		145		119		(1,027)
Prior year deferred tax true-up		2,163		-		-
Other		(7)		68		-
Total income tax expense	$	2,683	$	24,753	$	20,108

Income tax expense for the year ended December 31, 2016 was $2.7 million, which includes $2.2 million of additional tax expense related to a prior year adjustment impacting deferred taxes.

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 our net deferred tax liability are as follows:



	Year Ended December 31,
	2016		2015
	(in thousands)
Deferred tax assets:
Unearned premiums	$	13,975	$	9,375
Unpaid losses and loss adjustment expenses		1,612		1,175
Accrued expenses		692		694
Net operating loss carryforwards		7		140
Share-based compensation		582		606
Other		155		212
Total		17,023		12,202

Deferred tax liabilities:
Deferred acquisition costs		(16,364)		(11,906)
Unrealized gains on investment securities		(1,277)		(2,336)
Deferred revenue related to reinsurance		-		(3,395)
Depreciation and amortization		(718)		-
Other		(97)		(192)
Total		(18,456)		(17,829)

Net deferred tax liability	$	(1,433)	$	(5,627)

The Company files a federal income tax return and various state and local tax returns. The Company’s consolidated federal and state income tax returns for 2013 - 2015 are open for review by the Internal Revenue Service (“IRS”) and other state taxing authorities.

As of December 31, 2016, 2015, and 2014, we have determined that there are no uncertain tax positions.