For financial reporting purposes, income from continuing operations before income taxes includes the following components (in thousands):

	2018		2017		2016
United States	$	79,669	$	74,151	$	66,848
Foreign (Canada)		171		169		158
Total	$	79,840	$	74,320	$	67,006

Income tax expense (benefit) included in the accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016 was as follows (in thousands):

	2018			2017			2016
Continuing operations :
Current:
Federal	$	12,626		$	21,086		$	18,816
Foreign		45			45			42
State and local		2,808			2,475			2,681
Total		15,479			23,606			21,539
Deferred:
Federal		2,047			(1,086	)		4,148
State and local		741			768			712
Total		2,788			(318	)		4,860
Total income tax expense from continuing operations		18,267			23,288			26,399
Discontinued operations :
Operations of discontinued operations:
Current		2			(418	)		(365	)
Deferred		(1	)		(19	)		(10	)
Total income tax expense from discontinued operations		1			(437	)		(375	)
Total income tax expense	$	18,268		$	22,851		$	26,024

The provision for income taxes attributable to income from continuing operations differed from the amount obtained by applying the federal statutory income tax rate to income from continuing operations before income taxes, as follows (in thousands, except percentages):

	2018			2017			2016
Tax at U.S. federal statutory rates	$	16,766		$	26,012		$	23,452
State taxes (net of federal benefit)		4,035			2,945			2,643
Business meals and entertainment — non-deductible		915			820			784
Reserves for uncertain tax positions		(1,124	)		(35	)		(87	)
Share-based compensation		(3,260	)		(3,837	)		—
Impact of the Tax Cuts and Jobs Act of 2017		—			(2,487	)		—
Non-deductible expenses		785			236			22
Other, net		150			(366	)		(415	)
Provision for income taxes from continuing operations	$	18,267		$	23,288		$	26,399
Effective income tax rate		22.9	%		31.3	%		39.4	%

ASU 2016-09 - Stock Compensation - We recognized a reduction to “Income tax expense” in the accompanying Consolidated Statements of Comprehensive Income of $3.3 million in 2018 and $3.8 million in 2017 (resulting from an increase in the fair value of an award from grant date to the vesting or exercise date, as applicable). The income tax benefit of $1.1 million in 2016 from share-based compensation was recorded in “Additional paid-in-capital” in the accompanying Consolidated Balance Sheets. Refer to Note 1, Basis of Presentation and Significant Accounting Policies to the accompanying consolidated financial statements for further discussion on new accounting pronouncement adoptions.

The Tax Act - On December 22, 2017, the Tax Act was signed into law, which permanently reduces the corporate federal income tax rate from 35% to 21% beginning in 2018. We recognized an income tax benefit of $2.5 million in 2017, due to the revaluation of our deferred tax liabilities. Our effective tax rate was 22.9% in 2018, compared to 31.3% in 2017.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2018 and 2017, were as follows (in thousands):

	2018			2017
Deferred tax assets:
Net operating loss carryforwards	$	1,091		$	1,229
Allowance for doubtful accounts		2,902			3,022
Employee benefits and compensation		24,761			21,155
Lease costs		4,099			3,611
State tax credit carryforwards		1,353			1,385
Property and equipment		—			528
Other deferred tax assets		287			633
Total gross deferred tax assets		34,493			31,563
Less: valuation allowance		(1,840	)		(1,657	)
Total deferred tax assets, net	$	32,653		$	29,906
Deferred tax liabilities:
Accrued interest	$	—		$	819
Client list intangible assets		1,184			1,513
Goodwill and other intangibles		35,840			30,913
Property and equipment		1,356			—
Other deferred tax liabilities		1,037			—
Total gross deferred tax liabilities	$	39,417		$	33,245
Net deferred tax liability	$	(6,764	)	$	(3,339	)

We have established valuation allowances for deferred tax assets related to certain employee benefits and compensation, state net operating loss (“NOL”) carryforwards and state income tax credit carryforwards at December 31, 2018 and December 31, 2017. The net increase in the valuation allowance of $0.2 million for the year ended December 31, 2018 primarily related to changes in the valuation allowance for NOLs. The net increase in the valuation allowance of $0.3 million for the year ended December 31, 2017 primarily related to changes in the valuation allowance as a result of the Tax Act.

In assessing the realization of deferred tax assets, management considers all available positive and negative evidence, including projected future taxable income, scheduled reversal of deferred tax liabilities, historical financial operations and tax planning strategies. Based upon review of these items, management believes it is more-likely-than-not that the Company will realize the benefits of these deferred tax assets, net of the existing valuation allowances.

We file income tax returns in the United States, Canada, and most state jurisdictions. In March 2016, the Internal Revenue Service completed its audit of our 2013 and 2014 federal income tax returns. We paid $0.5 million in settlement of this audit which had no impact on the 2016 income tax expense. With limited exceptions, our state and local income tax returns and non-U.S. income tax returns are no longer subject to tax authority examinations for years ending prior to January 1, 2014 and January 1, 2013, respectively.

The availability of NOLs and state tax credits are reported as deferred tax assets, net of applicable valuation allowances, in the accompanying Consolidated Balance Sheets. At December 31, 2018, we had state net operating loss carryforwards of $23.2 million and state tax credit carryforwards of $1.4 million. The state net operating loss carryforwards expire on various dates between 2019 and 2038 and the state tax credit carryforwards expire on various dates between 2019 and 2028.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2018			2017			2016
Balance at January 1	$	3,882		$	4,090		$	4,287
Additions for tax positions of the current year		119			123			110
Settlements of prior year positions		(16	)		—			(11	)
Lapse of statutes of limitation		(1,166	)		(331	)		(296	)
Balance at December 31		2,819			3,882			4,090

Included in the balance of unrecognized tax benefits at December 31, 2018 are $1.9 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate. We believe it is reasonably possible that certain of these unrecognized tax benefits could change in the next twelve months. We expect reductions in the liability for unrecognized tax benefits of approximately $0.1 million within the next twelve months due to expiration of statutes of limitation. Given the number of years that are currently subject to examination, we are unable to estimate the range of potential adjustments to the remaining balance of unrecognized tax benefits at this time.

We recognize interest expense, and penalties related to unrecognized tax benefits as a component of income tax expense. During 2018, we accrued interest expense of less than $0.1 million and, as of December 31, 2018, had recognized a liability for interest expense and penalties of $0.7 million and $0.2 million, respectively, relating to unrecognized tax benefits. During 2017, we accrued interest expense of $0.2 million and, as of December 31, 2017, had recognized a liability for interest expense and penalties of $0.7 million and $0.2 million, respectively, relating to unrecognized tax benefits.