Income Taxes

The components of income tax expense for fiscal years 2017, 2016 and 2015 were as follows (in thousands):



	Fiscal Year Ended
	February 3, 2018		January 28, 2017			January 30, 2016
Current:
Federal	$	6,236	$	7,939		$	7,614
State	1,304		1,602			1,439
	7,540		9,541			9,053
Deferred:
Federal	2,436		(1,121		)	1,105
State	533		(82		)	449
	2,969		(1,203		)	1,554
Total income tax expense	$	10,509	$	8,338		$	10,607

A reconciliation of income tax expense to the amount computed at the federal statutory rate for fiscal years 2017, 2016 and 2015 is as follows (in thousands):



	Fiscal Year Ended
	February 3, 2018			January 28, 2017			January 30, 2016
Federal taxes at statutory rate	$	8,529		$	6,913		$	6,352
State and local income taxes, net of federal benefit	1,216			988			1,098
Tax reform impact	491			—			—
Stock compensation discrete items (1)	231			558			2,592
Return to provision adjustments	124			(40		)	130
Other	(82		)	(81		)	435
Total income tax expense	$	10,509		$	8,338		$	10,607

(1)

This amount includes the impact of discrete items related to the expiration of stock options, exercises of stock options and the settlement of restricted stock units that are recorded to income tax expense which represents stock-based compensation cost previously recognized by us that was greater than the deduction allowed for income tax purposes based on the price of our common stock on the date of expiration, exercise or vesting.

On December 22, 2017, the Tax Act was signed into law, a significant modification of existing U.S. federal tax legislation, was enacted which reduced our U.S. federal tax rate from 35% to 21%, effective January 1, 2018. The statutory tax rate for the current year reflects this change in tax rate. The decrease in rate resulted in a $0.2 million decrease in our provision for income taxes, offset by a $0.5 million impact on our deferred tax assets. Our accounting for the income tax effects of the new tax legislation, based on available guidance and interpretation, is included in our provision amount and we do not anticipate material adjustments to such accounting in future periods.

Deferred income taxes reflect the net tax effects of: (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes; and (b) operating loss and tax credit carry-forwards. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Significant components of deferred tax assets and liabilities as of February 3, 2018 and January 28, 2017 were as follows (in thousands):



	February 3, 2018			January 28, 2017
Deferred tax assets:
Deferred rent	$	3,523		$	5,343
Stock-based compensation	1,705			2,574
Inventories	1,650			2,712
Accrued expenses	1,079			1,753
Compensation and benefits	471			687
Deferred revenue	187			318
Tax credits	51			162
Capital lease	4			147
Total deferred tax assets	8,670			13,696
Deferred tax liabilities:
Property and equipment	(5,367		)	(7,344		)
Prepaid expenses	(526		)	(606		)
Marketable securities	(9		)	(44		)
Total deferred tax liabilities	(5,902		)	(7,994		)
Net deferred tax asset	$	2,768		$	5,702

Deferred tax assets are included in “Other assets" in the accompanying Consolidated Balance Sheets.

As of February 3, 2018 and January 28, 2017, we had approximately $0.1 million of California Enterprise Zone credit carryovers. These credits will begin to expire during fiscal year 2022 if not utilized.

Uncertain Tax Positions

As of February 3, 2018 and January 28, 2017, there were no material unrecognized tax benefits. We do not anticipate that there will be a material change in the balance of the unrecognized tax benefits in the next 12 months. Any interest and penalties related to uncertain tax positions are recorded in income tax expense. We did not recognize any interest or penalties related to unrecognized tax benefits during fiscal years 2017, 2016 and 2015.

We file income tax returns in the United States federal jurisdiction and in various state and local jurisdictions. In the normal course of business, we are subject to examination by taxing authorities. Fiscal years 2015 and 2016 remain subject to examination for federal tax purposes and fiscal years 2013 through 2016 remain subject to examination in significant state tax jurisdictions.