INCOME TAXES

The provision for income taxes from continuing operations was comprised of the following:



(In thousands)	2015			2014			2013
Current:
U.S. Federal	$	73,421		$	74,235		$	81,270
U.S. State and local	10,660			12,840			14,506
Total current tax expense	84,081			87,075			95,776
Deferred:
U.S. Federal	56			(2,022		)	(8,275		)
U.S. State and local	(295		)	186			(1,986		)
Total deferred tax expense	(239		)	(1,836		)	(10,261		)
Income tax provision	$	83,842		$	85,239		$	85,515

Net deferred tax assets fluctuated by items that are not reflected in deferred tax expense in the above table, primarily related to matters associated with discontinued operations. Net deferred tax assets increased by $0.4 million in 2015, decreased by $24.3 million in 2014, and increased by $22.0 million in 2013 as a result of deferred income tax expense associated with our discontinued operations. Additionally, net deferred tax assets also increased by $0.8 million in 2015, increased by $4.0 million in 2014, and decreased by $2.3 million in 2013, principally from pension-related charges recorded in accumulated other comprehensive loss.

Reconciliation between the statutory federal income tax rate and the effective income tax rate for continuing operations was as follows:



	2015		2014		2013
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Effect of:
State and local income taxes, net of federal tax benefit	3.0		3.8		3.6
Work opportunity tax and other employment tax credits	(1.1	)	(0.7	)	(1.0	)
Valuation allowance	—		—		—
Other, net	0.1		0.3		0.1
Effective income tax rate	37.0	%	38.4	%	37.7	%

Income tax payments and refunds were as follows:



(In thousands)	2015			2014			2013
Income taxes paid	$	56,158		$	69,919		$	122,672
Income taxes refunded	(818		)	(135		)	(551		)
Net income taxes paid	$	55,340		$	69,784		$	122,121

Deferred taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax, including income tax uncertainties. Significant components of our deferred tax assets and liabilities were as follows:



(In thousands)	January 30, 2016			January 31, 2015
Deferred tax assets:
Workers’ compensation and other insurance reserves	$	33,531		$	32,242
Compensation related	31,478			28,047
Accrued rent	23,540			26,283
Uniform inventory capitalization	18,488			17,649
Depreciation and fixed asset basis differences	10,523			9,972
Pension plans	7,815			9,086
Accrued state taxes	7,119			6,869
State tax credits, net of federal tax benefit	4,253			4,048
Accrued operating liabilities	2,189			1,751
Other	19,775			20,099
Valuation allowances	(2,419		)	(2,373		)
Total deferred tax assets	156,292			153,673
Deferred tax liabilities:
Accelerated depreciation and fixed asset basis differences	70,698			67,299
Lease construction reimbursements	15,602			15,317
Prepaid expenses	6,625			6,247
Workers’ compensation and other insurance reserves	4,329			4,203
Other	11,299			14,314
Total deferred tax liabilities	108,553			107,380
Net deferred tax assets	$	47,739		$	46,293

We have the following income tax loss and credit carryforwards at January 30, 2016 (amounts are shown net of tax excluding the federal income tax effect of the state and local items):



(In thousands)
U.S. State and local:
State net operating loss carryforwards	$	82	Expires fiscal years 2020 through 2025
California enterprise zone credits	6,245		Predominately expires fiscal year 2023
Other state credits	298		Expires fiscal years through 2025
Total income tax loss and credit carryforwards	$	6,625

Income taxes payable on our consolidated balance sheets have been reduced by the tax benefits primarily associated with share-based compensation. We receive an income tax deduction upon the exercise of non-qualified stock options and the vesting of restricted stock. Tax benefits of $0.7 million, $1.2 million, and $0.2 million in 2015, 2014, and 2013, respectively, were credited directly to shareholders' equity related to share-based compensation deductions in excess of expense recognized for these awards.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for 2015, 2014, and 2013:



(In thousands)	2015			2014			2013
Unrecognized tax benefits - beginning of year	$	14,922		$	16,650		$	16,019
Gross increases - tax positions in current year	939			898			991
Gross increases - tax positions in prior period	872			820			1,247
Gross decreases - tax positions in prior period	(430		)	(2,418		)	(532		)
Settlements	(732		)	(488		)	(4		)
Lapse of statute of limitations	(1,799		)	(566		)	(949		)
Foreign currency translation	—			26			(122		)
Unrecognized tax benefits - end of year	$	13,772		$	14,922		$	16,650

At the end of 2015 and 2014, the total amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate is $8.9 million and $9.6 million, respectively, after considering the federal tax benefit of state and local income taxes of $4.3 million and $4.7 million, respectively. Unrecognized tax benefits of $0.5 million and $0.6 million in 2015 and 2014, respectively, relate to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The uncertain timing items could result in the acceleration of the payment of cash to the taxing authority to an earlier period.

We recognized an expense (benefit) associated with interest and penalties on unrecognized tax benefits of approximately $0.1 million, $0.5 million, and $0.5 million during 2015, 2014, and 2013, respectively, as a component of income tax expense. The amount of accrued interest and penalties recognized in the accompanying consolidated balance sheets at January 30, 2016 and January 31, 2015 was $6.1 million and $6.0 million, respectively.

We are subject to U.S. federal income tax, income tax of multiple state and local jurisdictions, and Canadian and provincial taxes. The statute of limitations for assessments on our federal income tax returns for periods prior to 2012 has lapsed. In addition, the state income tax returns filed by us are subject to examination generally for periods beginning with 2006, although state income tax carryforward attributes generated prior to 2006 and non-filing positions may still be adjusted upon examination. We have various state returns in the process of examination or administrative appeal. Generally, the time limit for reassessing returns for Canadian and provincial income taxes for periods prior to the year ended October 3, 2010 have lapsed.

We have estimated the reasonably possible expected net change in unrecognized tax benefits through January 28, 2017, based on expected cash and noncash settlements or payments of uncertain tax positions and lapses of the applicable statutes of limitations for unrecognized tax benefits. The estimated net decrease in unrecognized tax benefits for the next 12 months is approximately $3.0 million. Actual results may differ materially from this estimate.