INCOME TAXES

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



(In thousands)	2016			2015			2014
Current:
U.S. Federal	$	87,522		$	73,421		$	74,235
U.S. State and local	13,124			10,660			12,840
Total current tax expense	100,646			84,081			87,075
Deferred:
U.S. Federal	(7,979		)	56			(2,022		)
U.S. State and local	(1,209		)	(295		)	186
Total deferred tax expense	(9,188		)	(239		)	(1,836		)
Income tax provision	$	91,458		$	83,842		$	85,239

Net deferred tax assets fluctuated by items that are not reflected in deferred tax expense in the above table, in 2016 this fluctuation is primarily related to the termination of the defined benefit pension plan. Net deferred tax assets decreased by $10.4 million in 2016, increased by $0.8 million in 2015, and increased by $4.0 million in 2014, principally from pension-related charges recorded in accumulated other comprehensive loss. Additionally, net deferred tax assets increased by $0.4 million in 2015, and decreased by $24.3 million in 2014 as a result of deferred income tax expense associated with our discontinued operations.

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



	2016		2015		2014
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Effect of:
State and local income taxes, net of federal tax benefit	3.2		3.0		3.8
Work opportunity tax and other employment tax credits	(1.1	)	(1.1	)	(0.7	)
Valuation allowance	—		—		—
Other, net	0.4		0.1		0.3
Effective income tax rate	37.5	%	37.0	%	38.4	%

Income tax payments and refunds were as follows:



(In thousands)	2016			2015			2014
Income taxes paid	$	103,323		$	56,158		$	69,919
Income taxes refunded	(16,187		)	(818		)	(135		)
Net income taxes paid	$	87,136		$	55,340		$	69,784

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 28, 2017			January 30, 2016
Deferred tax assets:
Compensation related	$	39,616		$	31,478
Workers’ compensation and other insurance reserves	32,194			33,531
Accrued rent	22,259			23,540
Uniform inventory capitalization	18,648			18,488
Depreciation and fixed asset basis differences	10,095			10,523
Accrued state taxes	7,157			7,119
State tax credits, net of federal tax benefit	3,844			4,253
Accrued operating liabilities	2,056			2,189
Pension plans	—			7,815
Other	17,138			19,775
Valuation allowances	(2,087		)	(2,419		)
Total deferred tax assets	150,920			156,292
Deferred tax liabilities:
Accelerated depreciation and fixed asset basis differences	71,155			70,698
Lease construction reimbursements	15,682			15,602
Prepaid expenses	6,553			6,625
Workers’ compensation and other insurance reserves	3,482			4,329
Other	7,579			11,299
Total deferred tax liabilities	104,451			108,553
Net deferred tax assets	$	46,469		$	47,739

We have the following income tax loss and credit carryforwards at January 28, 2017 (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	$	39	Expires fiscal years 2020 through 2025
California enterprise zone credits	5,611		Predominately expires fiscal year 2023
Other state credits	302		Expires fiscal years through 2025
Total income tax loss and credit carryforwards	$	5,952

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 awards, restricted stock units, and PSUs. Tax benefits of $0.5 million, $0.7 million, and $1.2 million in 2016, 2015, and 2014, respectively, were credited directly to shareholders' equity related to share-based compensation income tax deductions in excess of expense recognized for these awards.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for 2016, 2015, and 2014:



(In thousands)	2016			2015			2014
Unrecognized tax benefits - beginning of year	$	13,772		$	14,922		$	16,650
Gross increases - tax positions in current year	822			939			898
Gross increases - tax positions in prior period	171			872			820
Gross decreases - tax positions in prior period	(80		)	(430		)	(2,418		)
Settlements	(236		)	(732		)	(488		)
Lapse of statute of limitations	(1,328		)	(1,799		)	(566		)
Foreign currency translation	—			—			26
Unrecognized tax benefits - end of year	$	13,121		$	13,772		$	14,922

At the end of 2016 and 2015, the total amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate is $8.4 million and $8.9 million, respectively, after considering the federal tax benefit of state and local income taxes of $4.1 million and $4.3 million, respectively. Unrecognized tax benefits of $0.6 million and $0.5 million in 2016 and 2015, 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 $0.2 million, $0.1 million, and $0.5 million during 2016, 2015, and 2014, respectively, as a component of income tax expense. The amount of accrued interest and penalties recognized in the accompanying consolidated balance sheets at January 28, 2017 and January 30, 2016 was $6.3 million and $6.1 million, respectively.

We are subject to U.S. federal income tax, income tax of multiple state and local jurisdictions. The statute of limitations for assessments on our federal income tax returns for periods prior to 2013 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. After acquiring Canadian operations on July 18, 2011 and prior to dissolution on June 10, 2014, we also were subject to Canadian and provincial taxes. Generally, the time limit for reassessing returns for Canadian and provincial income taxes for periods prior to the short fiscal period ended July 18, 2011 have lapsed.

We have estimated the reasonably possible expected net change in unrecognized tax benefits through February 3, 2018, 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 $4.0 million. Actual results may differ materially from this estimate.