Income Taxes

The components of income tax expense for the years ended December 31 are summarized as follows:



(in thousands)	2019			2018			2017
Current:
Federal	$	5,945		$	9,156		$	9,163
State	142			128			71
Total current	6,087			9,284			9,234
Deferred:
Federal	2,280			(4,064		)	(4,649		)
State	(2		)	(10		)	(15		)
Total deferred	2,278			(4,074		)	(4,664		)
Total	$	8,365		$	5,210		$	4,570

For state income tax purposes, ITIC and NITIC generally pay only a gross premium tax found in other expenses in the Consolidated Statements of Income.

At December 31, the approximate tax effect of each component of deferred income tax assets and liabilities is summarized as follows:



(in thousands)	2019			2018
Deferred income tax assets:
Accrued benefits and retirement services	$	3,049		$	2,758
Other-than-temporary impairment of assets	178			198
Allowance for doubtful accounts	91			82
Net operating loss carryforward	77			28
Reinsurance and commission payable	36			13
Postretirement benefit obligation	9			8
Other	1,329			359
Total	4,769			3,446
Deferred income tax liabilities:
Net unrealized gain on investments	6,691			3,924
Intangible assets	1,168			1,250
Recorded reserve for claims, net of statutory premium reserves	1,096			599
Excess of tax over book depreciation	947			1,104
Other	1,905			753
Total	11,807			7,630
Net deferred income tax liabilities	$	(7,038	)	$	(4,184	)

At December 31, 2019 and 2018, there were no valuation allowances recorded. Based upon the Company’s historical results of operations, the existing financial condition of the Company and management’s assessment of all other available information, management believes that it is more likely than not that the benefit of these deferred income tax assets will be realized.

As computed for the years ended December 31 at the U.S. federal statutory income tax rate of 21.0% for 2019, 21.0% for 2018 and 35.0% for 2017, respectively, to income tax expense follows:



(in thousands)	2019			2018			2017
Anticipated income tax expense	$	8,362		$	5,684		$	10,595
Increase (decrease) related to:
State income taxes, net of federal income tax benefit	112			101			46
Tax-exempt interest income, net of amortization	(900		)	(1,026		)	(1,298		)
Tax Cuts and Jobs Act*	—			—			(5,342		)
Other, net	791			451			569
Provision for income taxes	$	8,365		$	5,210		$	4,570

* On December 22, 2017, the TCJA, was enacted into law. This tax legislation, among other changes, reduced the federal corporate income tax rate from 35.0% to 21.0%, effective January 1, 2018. As required under generally accepted accounting principles, the Company’s deferred tax assets and liabilities were revalued at the newly enacted U.S. corporate income tax rate. The impact was recognized in the Company’s provision for income taxes in the fourth quarter of 2017. The revaluation resulted in a benefit of approximately $5.3 million, or $2.82 per diluted share.

In accounting for uncertainty in income taxes, the Company is required to recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on an audit, based on the technical merits of the position. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. There were no unrecognized tax benefits or liabilities as of December 31, 2019.

The amount of unrecognized tax benefit or liability may increase or decrease in the future for various reasons, including adding amounts for current tax year positions, expiration of open income tax returns due to the expiration of the applicable statute of limitations, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the additions or eliminations of uncertain tax positions.

The Company’s policy is to report interest and penalties related to income taxes in the other line item in the Consolidated Statements of Income.

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal or state and local examinations by taxing authorities for years before 2016.