21.Taxes on Income

The components of income tax expense are as follows:


Year Ended December 31,		2015		2014		2013
Current:
Federal	$	740	$	747	$	598
State		99		72		57
Total current		839		819		655
Deferred:
Federal		(6)		(23)		(20)
State		(1)		(2)		(1)
Total deferred		(7)		(25)		(21)
Taxes on income	$	832	$	794	$	634

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


December 31,		2015		2014
Deferred tax assets:
Employee compensation, severance, and benefits	$	221	$	213
Net unrealized loss on securities available for sale		80		-
Facilities lease commitments		28		30
Reserves and allowances		28		25
State and local taxes		14		12
Net operating loss carryforwards		6		6
Other		1		-
Total deferred tax assets		378		286
Valuation allowance		(4)		(4)
Deferred tax assets – net of valuation allowance		374		282
Deferred tax liabilities:
Depreciation and amortization		(115)		(125)
Net unrealized gain on securities available for sale		-		(98)
Capitalized internal-use software development costs		(97)		(76)
Deferred cancellation of debt income		(6)		(9)
Deferred loan costs		(5)		(7)
Deferred Senior Note exchange		(6)		(6)
Total deferred tax liabilities		(229)		(321)
Deferred tax asset (liability) – net (1)	$	145	$	(39)

(1)	Amounts are included in other assets and in accrued expenses and other liabilities at December 31, 2015 and 2014, respectively.

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


Year Ended December 31,	2015		2014		2013
Federal statutory income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	2.6		2.3		2.3
Other	(1.1)		0.2		(0.1)
Effective income tax rate	36.5	%	37.5	%	37.2	%

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


December 31,		2015		2014
Balance at beginning of year	$	11	$	10
Additions for tax positions related to the current year		15		1
Additions for tax positions related to prior years		26		1
Reductions due to lapse of statute of limitations		(4)		(1)
Balance at end of year	$	48	$	11

At December 31, 2015 and 2014, there are $41 million and $7 million, respectively, of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.

The Company recognizes interest accrued related to unrecognized tax benefits in tax expense and penalties in other expense. The Company had approximately $6 million and $1 million for the payment of interest and penalties accrued at December 31, 2015 and 2014, respectively.

The federal returns for 2011 through 2014 remain open to Federal tax examinations. The years open to examination by state and local governments vary by jurisdiction.