20.Taxes on Income

The components of income tax expense are as follows:


Year Ended December 31,		2014		2013		2012
Current:
Federal	$	747	$	598	$	489
State		72		57		28
Total current		819		655		517
Deferred:
Federal		(23)		(20)		5
State		(2)		(1)		-
Total deferred		(25)		(21)		5
Taxes on income	$	794	$	634	$	522

The temporary differences that created deferred tax assets and liabilities are detailed below:


December 31,		2014		2013
Deferred tax assets:
Employee compensation, severance, and benefits	$	213	$	190
Facilities lease commitments		30		33
Reserves and allowances		25		30
State and local taxes		12		12
Net operating loss carryforwards		6		6
Total deferred tax assets		286		271
Valuation allowance		(4)		(4)
Deferred tax assets – net of valuation allowance		282		267
Deferred tax liabilities:
Depreciation and amortization		(125)		(142)
Net unrealized gain on securities available for sale		(98)		(5)
Capitalized internal-use software development costs		(76)		(62)
Deferred cancellation of debt income		(9)		(11)
Deferred loan costs		(7)		(10)
Deferred Senior Note exchange		(6)		(7)
Other		-		(2)
Total deferred tax liabilities		(321)		(239)
Deferred tax (liability) asset – net (1)	$	(39)	$	28

(1)	Amounts are included in other assets and in accrued expenses and other liabilities at December 31, 2014 and 2013, respectively.

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:


Year Ended December 31,	2014		2013		2012
Federal statutory income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit (1)	2.3		2.3		1.2
Other	0.2		(0.1)		(0.2)
Effective income tax rate	37.5	%	37.2	%	36.0	%

(1)	Includes the impact of a non-recurring state tax benefit of which $4 million and $20 million were recorded in 2013 and 2012, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


December 31,		2014		2013
Balance at beginning of year	$	10	$	12
Additions for tax positions related to the current year		1		1
Additions for tax positions related to prior years		1		-
Reductions due to lapse of statute of limitations		(1)		(2)
Reductions for settlements with tax authorities		-		(1)
Balance at end of year	$	11	$	10

The federal returns for 2011 through 2013 remain open to Federal tax examinations. The years open to examination by state and local governments vary by jurisdiction.