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Income Taxes | 12 Months Ended
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Jan. 01, 2019
Income Taxes |
Income Taxes | 15. Income Taxes The provision for income taxes consisted of the following (in thousands):
|  | Fiscal Year
|  | 2018 |  | 2017(1) |  | 2016
Income before income taxes |  | $ | 107,411 |  | $ | 146,466 |  | $ | 191,768
Income tax provision/(benefit): |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 5,082 |  | $ | 7,148 |  | $ | 42,665
State |  |  | 8,804 |  |  | 7,106 |  |  | 10,614
Total current |  |  | 13,886 |  |  | 14,254 |  |  | 53,279
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (4,549) |  |  | (24,570) |  |  | (564)
State |  |  | (961) |  |  | (610) |  |  | (441)
Total deferred |  |  | (5,510) |  |  | (25,180) |  |  | (1,005)
Total provision/(benefit) |  | $ | 8,376 |  | $ | (10,926) |  | $ | 52,274
| (1) |  | The Tax Act, which was enacted on December 22, 2017, made significant changes to how corporations are taxed in the U.S., the most prominent of which affecting us was to lower the U.S. corporate tax rate from 35% to 21%. In addition to the benefit of a lower rate in future years, the enactment of the Tax Act caused us to revalue our deferred tax assets and liabilities to reflect the new rate, resulting in a benefit to our fiscal 2017 income tax provision of $38.5 million.
The following reconciles the U.S. federal statutory rate to the effective tax rate:
|  | Fiscal Year |
|  | 2018 |  | 2017 |  | 2016 |
U.S. federal statutory rate |  | 21.0 | % | 35.0 | % | 35.0 | %
State and district income taxes, net of federal benefit |  | 6.1 |  | 3.3 |  | 3.5 |
Credit for FICA taxes paid on tips |  | (16.5) |  | (9.4) |  | (7.0) |
Other credits and incentives |  | (2.5) |  | (1.9) |  | (1.3) |
Manufacturing deduction |  | — |  | (2.3) |  | (2.5) |
Deferred compensation |  | 0.8 |  | (1.5) |  | (0.5) |
Equity compensation |  | (1.5) |  | (4.5) |  | — |
Impact of statutory rate change on deferred taxes |  | — |  | (26.3) |  | — |
Other |  | 0.4 |  | 0.1 |  | 0.1 |
Effective tax rate |  | 7.8 | % | (7.5) | % | 27.3 | %
Following are the temporary differences that created our deferred tax assets and liabilities (in thousands):
|  | January 1, 2019 |  | January 2, 2018
Deferred tax assets: |  |  |  |  |  |
Staff member benefits |  | $ | 22,925 |  | $ | 22,626
Insurance reserves |  |  | 15,165 |  |  | 14,027
Accrued rent |  |  | 10,870 |  |  | 12,523
Deferred income |  |  | 17,288 |  |  | 11,607
Stock-based compensation |  |  | 8,628 |  |  | 8,710
Tax credit carryforwards |  |  | 1,880 |  |  | 2,308
Other |  |  | 1,265 |  |  | 738
Subtotal |  |  | 78,021 |  |  | 72,539
Less: Valuation allowance |  |  | (792) |  |  | (455)
Total |  | $ | 77,229 |  | $ | 72,084
Deferred tax liabilities: |  |  |  |  |  |
Property and equipment |  | $ | (107,513) |  | $ | (111,324)
Prepaid expenses |  |  | (7,929) |  |  | (9,120)
Inventory |  |  | (6,893) |  |  | (6,724)
Other |  |  | (5,420) |  |  | (2,132)
Total |  | $ | (127,755) |  | $ | (129,300)
Net deferred tax liability |  | $ | (50,526) |  | $ | (57,216)
At January 1, 2019 and January 2, 2018, we had $2.4 million and $2.9 million, respectively, of state tax credit carryforwards, consisting of hiring and investment credits, which began to expire in 2013, and $0.7 million of foreign net operating losses which begin to expire in 2038. We assess 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 of $0.8 million and $0.5 million at January 1, 2019 and January 2, 2018, retrospectively, to reflect the amount that we will likely not realize. 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 January 1, 2019, we had a reserve of $0.8 million for uncertain tax positions. If recognized, this amount would impact our effective income tax rate. A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands):
|  | Fiscal Year
|  | 2018 |  | 2017 |  | 2016
Balance at beginning of year |  | $ | 843 |  | $ | 829 |  | $ | 1,067
Additions related to current period tax positions |  |  | 104 |  |  | 168 |  |  | 139
Reductions related to settlements with taxing authorities and lapses of statutes of limitations |  |  | (117) |  |  | (154) |  |  | (377)
Balance at end of year |  | $ | 830 |  | $ | 843 |  | $ | 829
At January 1, 2019 and January 2, 2018, we had $0.2 million and $0.1 million, respectively, of accrued interest and penalties related to uncertain tax positions. None of the balance of uncertain tax positions at January 1, 2019 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. We have completed our analysis of the Tax Cuts and Jobs Act, including related subsequent guidance, and have recorded its effects in the financial statements.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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