13.Income Taxes

The provision for income taxes consisted of the following (in thousands):

	Fiscal Year
	2015			2014			2013

Income before income taxes	$	159,352		$	138,544		$	156,450

Income tax provision/(benefit):
Current:
Federal	$	32,765		$	28,687		$	28,754
State	8,880			8,377			8,707

Total current	41,645			37,064			37,461

Deferred:
Federal	2,659			480			5,342
State	(1,475		)	(276		)	(709		)

Total deferred	1,184			204			4,633

Total provision	$	42,829		$	37,268		$	42,094

The following reconciles the U.S. federal statutory rate to the effective tax rate:

	Fiscal Year
	2015		2014		2013

U.S. federal statutory rate	35.0	%	35.0	%	35.0	%

State and district income taxes, net of federal benefit	3.0		3.8		3.3
FICA tip credit	(8.0	)	(8.4	)	(7.0	)
Other credits and incentives	(1.0	)	(0.7	)	(0.9	)
Manufacturing deduction	(2.8	)	(2.9	)	(2.4	)
Deferred compensation	0.3		(0.4	)	(1.0	)
Other	0.4		0.5		(0.1	)

Effective tax rate	26.9	%	26.9	%	26.9	%

Following are the temporary differences that created our deferred tax assets and liabilities (in thousands):

	December 29, 2015			December 30, 2014
Deferred tax assets:
Employee benefits	$	28,856		$	24,476
Insurance reserves	19,399			18,012
Accrued rent	21,504			22,291
Stock-based compensation	16,100			15,350
Deferred income	11,406			9,273
Tax credit carryforwards	2,694			1,954
Other	794			1,259

Subtotal	100,753			92,615
Less: Valuation allowance	(618		)	(574		)

Total	$	100,135		$	92,041


Deferred tax liabilities:
Property and equipment	$	(160,764	)	$	(153,362	)
Inventory	(10,154		)	(9,749		)
Prepaid expenses	(11,741		)	(10,363		)

Total	$	(182,659	)	$	(173,474	)


Net deferred tax liability	$	(82,524	)	$	(81,433	)

At December 29, 2015 and December 30, 2014, we had $4.1 million and $3.0 million, respectively, of state tax credit carryforwards. These credits began to expire in 2013. Management assesses the available evidence to estimate if sufficient future taxable income will be generated to use these carryforwards. Based on this evaluation, we recorded a valuation allowance relating to hiring and investment tax credits in North Carolina and California to reflect the amount that more likely than not will not be realized. The valuation allowance amounted to $0.6 million at both December 29, 2015 and December 30, 2014. We believe it is more likely than not that all other state tax credit carryforwards will be realized. However, this assessment could change if estimates of future taxable income during the carryforward period are revised. The earliest tax year still subject to examination by a significant taxing jurisdiction is 2010.

At December 29, 2015, we had $1.1 million of unrecognized tax benefits. If recognized, this amount would affect our effective income tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	Fiscal Year
	2015			2014			2013

Balance at beginning of year	$	875		$	802		$	695
Additions related to current period tax positions	192			233			254
Reductions related to settlements with taxing authorities and lapses of statutes of limitations	(0		)	(160		)	(147		)

Balance at end of year	$	1,067		$	875		$	802

At both December 29, 2015 and December 30, 2014, we had approximately $0.1 million of accrued interest and penalties related to uncertain tax positions. None of the balance of unrecognized tax benefits at December 29, 2015 relates to tax positions for which it is reasonably possible that the total amount could decrease during the next twelve months based on the lapses of statutes of limitations.