4. Income taxes

The provision (benefit) for income taxes consists of the following:

(In thousands)	2014			2013			2012
Current:
Federal	$	543,089		$	530,728		$	457,370
Foreign		1,245			1,324			1,209
State		81,816			101,174			78,025

		626,150			633,226			536,604

Deferred:
Federal		(7,697	)		(16,132	)		9,734
State		(2,937	)		(13,880	)		(1,606	)

		(10,634	)		(30,012	)		8,128

	$	615,516		$	603,214		$	544,732

A reconciliation between actual income taxes and amounts computed by applying the federal statutory rate to income before income taxes is summarized as follows:

(Dollars in thousands)	2014					2013					2012
U.S. federal statutory rate on earnings before income taxes	$	588,303		35.0	%	$	569,916		35.0	%	$	524,088		35.0	%
State income taxes, net of federal income tax benefit		49,819		3.0			56,822		3.5			52,713		3.5
Jobs credits, net of federal income taxes		(18,961	)	(1.1	)		(19,348	)	(1.2	)		(16,062	)	(1.1	)
Increase (decrease) in valuation allowances		1,453		0.1			(437	)	—			(3,050	)	(0.2	)
Decrease in income tax reserves		(6,449	)	(0.4	)		(6,391	)	(0.4	)		(13,676	)	(0.9	)
Other, net		1,351		—			2,652		0.1			719		0.1

	$	615,516		36.6	%	$	603,214		37.0	%	$	544,732		36.4	%

The 2014 effective tax rate was an expense of 36.6%. This expense was greater than the federal statutory tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax rate. The 2014 effective income tax rate decreased from 2013 due principally to the favorable resolution of state income tax examinations and a reduction in other state income tax reserve increases. As in prior years, the Company receives a significant income tax benefit related to salaries paid to certain newly hired employees that qualify for federal jobs credits (principally the Work Opportunity Tax Credit or "WOTC"). The federal law authorizing the WOTC credit expired for employees hired after December 31, 2014. Whether these credits will be available for employees hired after December 31, 2014 depends upon a change in the tax law that extends the expiration date of these credit provisions, the certainty and timing of which are currently unclear.

The 2013 effective tax rate was an expense of 37.0%. The 2013 effective income tax rate increased from 2012 due to the favorable resolution of income tax examinations during 2012 that did not reoccur, to the same extent, in 2013. This rate increase was partially offset by the recording of an income tax benefit in 2013 associated with the expiration of the assessment period during which the taxing authorities could have assessed additional income tax associated with the Company's 2009 tax year.

The 2012 effective tax rate was an expense of 36.4%. This expense was greater than the federal statutory tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax rate.

Deferred taxes reflect the effects of temporary differences between 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 tax assets and liabilities are as follows:

(In thousands)	January 30, 2015			January 31, 2014
Deferred tax assets:
Deferred compensation expense	$	8,842		$	8,666
Accrued expenses and other		5,146			9,067
Accrued rent		19,360			17,375
Accrued insurance		76,197			78,557
Accrued incentive compensation		14,866			3,385
Share based compensation		17,623			12,049
Interest rate hedges		4,318			4,921
Tax benefit of income tax and interest reserves related to uncertain tax positions		1,502			3,439
Deferred gain on sale-leaseback		24,385			26,186
Other		3,463			3,045
State tax net operating loss carry forwards, net of federal tax		87			282
State tax credit carry forwards, net of federal tax		11,039			8,282

		186,828			175,254
Less valuation allowances		(2,845	)		(1,393	)

Total deferred tax assets		183,983			173,861

Deferred tax liabilities:
Property and equipment		(302,531	)		(307,644	)
Inventories		(73,188	)		(64,481	)
Trademarks		(433,328	)		(433,130	)
Other		(1,794	)		(4,427	)

Total deferred tax liabilities		(810,841	)		(809,682	)

Net deferred tax liabilities	$	(626,858	)	$	(635,821	)

Net deferred tax liabilities are reflected separately on the consolidated balance sheets as current and noncurrent deferred income taxes. The following table summarizes net deferred tax liabilities as recorded in the consolidated balance sheets:

(In thousands)	January 30, 2015			January 31, 2014
Current deferred income tax liabilities, net	$	(25,268	)	$	(21,795	)
Noncurrent deferred income tax liabilities, net		(601,590	)		(614,026	)

Net deferred tax liabilities	$	(626,858	)	$	(635,821	)

The Company has state net operating loss carry forwards as of January 30, 2015 that total approximately $1.3 million which will expire in 2028. The Company also has state tax credit carry forwards of approximately $17.0 million that will expire beginning in 2022 through 2025.

A valuation allowance has been provided for state tax credit carry forwards. The 2014 increase of $1.5 million was recorded as an increase in income tax expense with the 2013 and 2012 decreases of $0.4 million and $3.1 million, respectively, recorded as reductions in income tax expense. Based upon expected future income, management believes that it is more likely than not that the results of operations will generate sufficient taxable income to realize the deferred tax assets after giving consideration to the valuation allowance.

The Internal Revenue Service ("IRS") has previously examined the Company's 2009 and earlier federal income tax returns. As a result, the 2009 and earlier tax years are not open for further examination by the IRS. Due to the filing of an amended federal income tax return for the 2010 tax year, the IRS may, to a limited extent, examine the Company's 2010 income tax filings. The IRS, at its discretion, may also choose to examine the Company's 2011 through 2014 fiscal year income tax filings. The Company has various state income tax examinations that are currently in progress. Generally, the Company's 2010 and later tax years remain open for examination by the various state taxing authorities.

As of January 30, 2015, accruals for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $9.3 million, $1.0 million and $0.4 million, respectively, for a total of $10.7 million. This total amount is reflected in noncurrent Other liabilities in the consolidated balance sheet.

As of January 31, 2014, accruals for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $19.6 million, $2.4 million and $0.4 million, respectively, for a total of $22.4 million. Of this total amount, $3.6 million and $18.8 million are reflected in current liabilities as Accrued expenses and other and in noncurrent Other liabilities, respectively, in the consolidated balance sheet.

The Company believes that it is reasonably possible that the reserve for uncertain tax positions may be reduced by approximately $3.0 million in the coming twelve months principally as a result of the effective settlement of outstanding issues. Also, as of January 30, 2015, approximately $9.3 million of the uncertain tax positions would impact the Company's effective income tax rate if the Company were to recognize the tax benefit for these positions.

The amounts associated with uncertain tax positions included in income tax expense consists of the following:

(In thousands)	2014			2013			2012
Income tax expense (benefit)	$	(9,497	)	$	(3,915	)	$	(16,119	)
Income tax related interest expense (benefit)		(1,445	)		590			344
Income tax related penalty expense (benefit)		51			30			(200	)

A reconciliation of the uncertain income tax positions from February 3, 2012 through January 30, 2015 is as follows:

(In thousands)	2014			2013			2012
Beginning balance	$	19,583		$	22,237		$	42,018
Increases—tax positions taken in the current year		198			3,484			2,114
Increases—tax positions taken in prior years		62			3,000			1,144
Decreases—tax positions taken in prior years		(8,636	)		(608	)		(22,669	)
Statute expirations		(1,121	)		(7,622	)		(166	)
Settlements		(743	)		(908	)		(204	)

Ending balance	$	9,343		$	19,583		$	22,237