13. Income Taxes

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

	Fiscal Year
	2014			2013			2012

Income before income taxes	$	138,544		$	156,450		$	133,974
Income tax provision:
Current:
Federal	$	28,687		$	28,754		$	39,792
State	8,377			8,707			8,517
Total current	37,064			37,461			48,309
Deferred:
Federal	480			5,342			(11,055		)
State	(276		)	(709		)	(1,703		)
Total deferred	204			4,633			(12,758		)
Total provision	$	37,268		$	42,094		$	35,551

The following is a reconciliation between the U.S. federal statutory rate and the effective tax rate:

	Fiscal Year
	2014		2013		2012

U.S. federal statutory rate	35.0	%	35.0	%	35.0	%
State and district income taxes, net of federal benefit	3.8		3.3		3.3
FICA tip credit	(8.4	)	(7.0	)	(7.7	)
Other credits and incentives	(0.7	)	(0.9	)	(0.6	)
Manufacturing deduction	(2.9	)	(2.4	)	(2.8	)
Deferred compensation	(0.4	)	(1.0	)	(0.7	)
Other	0.5		(0.1	)	—
Effective tax rate	26.9	%	26.9	%	26.5	%

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

	December 30, 2014			December 31, 2013
Deferred tax assets:
Employee benefits	$	24,476		$	23,707
Insurance reserves	18,012			15,622
Accrued rent	22,291			22,954
Stock-based compensation	15,350			13,822
Deferred income	9,273			7,922
Tax credit carryforwards	1,954			1,977
Other	1,259			1,320
Subtotal	92,615			87,324
Less: Valuation allowance	(574		)	(185		)
Total	$	92,041		$	87,139

Deferred tax liabilities:
Property and equipment	$	(153,362	)	$	(150,226	)
Inventory	(9,749		)	(9,299		)
Prepaid expenses	(10,363		)	(8,843		)
Total	$	(173,474	)	$	(168,368	)

Net deferred tax liability	$	(81,433	)	$	(81,229	)

Reported in consolidated balance sheets as:
Deferred income taxes — current asset	$	15,076		$	16,008
Deferred income taxes — noncurrent liability	(96,509		)	(97,237		)
Total	$	(81,433	)	$	(81,229	)

At both December 30, 2014 and December 31, 2013, we had $3.0 million 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 of $0.6 million and $0.2 million as of December 30, 2014 and December 31, 2013, respectively, to reflect the amount that more likely than not will not be realized. 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 30, 2014, we had $0.9 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
	2014			2013			2012

Balance at beginning of year	$	802		$	695		$	590
Additions related to current period tax positions	233			254			230
Reductions related to settlements with taxing authorities and lapses of statutes of limitations	(160		)	(147		)	(125		)
Balance at end of year	$	875		$	802		$	695

At both December 30, 2014 and December 31, 2013, 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 31, 2014 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.