11. Income Taxes

Provision for income taxes consists of the following:

Current income tax expense, which represents the amount of federal tax and state and local tax currently payable, including interest and penalties and amounts accrued for unrecognized tax benefits, if any, and;

Deferred income tax expense, which represents the net change in the deferred tax assets balance during the year, including any change in the valuation allowance for the deferred tax assets, if any. For the three months ended March 31, 2020 and 2019, there was no change in the valuation allowance for the deferred tax assets.

The change in deferred tax assets for the three months ended March 31, 2020 and 2019 was due to the utilization of federal and state net operating losses and temporary differences in the depreciation of fixed assets and in the net change of the lease liabilities.

The following table presents the components of provision for income taxes for the periods indicated:

	Three Months Ended March 31,
	2020		2019
Current income tax expense
Federal	$	184,000	$	222,000
State and local		60,000		85,000
Total Current income tax expense		244,000		307,000

Deferred income tax expense
Federal		35,000		47,000
State and local		256,000		43,000
Total Deferred income tax expense		291,000		90,000

Total Provision for income taxes	$	535,000	$	397,000

Effective Tax Rate

For interim financial reporting, the Company estimates the effective tax rate for tax jurisdictions which is applied to the year to date income before provision for income taxes. For the three months ended March 31, 2020 and 2019, the Company’s effective tax rate was 35% and 24%, respectively. The increase in the Company’s effective tax rate is primarily due to changes in deferred tax expense calculated by using federal and state net operating losses.