2. Income Taxes

Deferred Income Tax Liabilities and Assets – Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates. Significant components of the Company’s deferred tax liabilities and assets are as follows:



	2016		2015
Deferred tax liabilities:
Property and equipment tax/book differences	$	88,465,000	$	82,199,000
Property tax method		1,501,000		1,491,000
Total deferred tax liabilities		89,966,000		83,690,000
Deferred tax assets:
Insurance reserves		8,390,000		8,607,000
Advance payments on purchases contracts		618,000		652,000
Vacation accrual		2,520,000		2,386,000
State tax credits		20,000		271,000
Inventory		1,720,000		1,939,000
Deferred compensation		4,062,000		3,390,000
Other		1,187,000		1,802,000
Total deferred tax assets		18,517,000		19,047,000
Net deferred tax liabilities	$	71,449,000	$	64,643,000

Current deferred income tax benefits of $7.3 million at September 24, 2016 and September 26, 2015, respectively, included in the caption “Deferred Income Taxes” in the Consolidated Balance Sheets, result from timing differences arising from deferred vendor income, vacation pay, non-income taxes, self-insurance reserves, and from capitalization of certain overhead costs in inventory for tax purposes.

At September 24, 2016 and September 26, 2015 refundable current income taxes totaling $2.0 million and $5.5 million, respectively, are included in the line item “Other current assets” on the Consolidated Balance Sheets.

Income Tax Expense - Income tax expense differs from the amounts computed by applying the statutory federal rates to income before income taxes. The reasons for the differences are as follows:



	2016		2015		2014

Federal tax at statutory rate	$	29,622,000	$	33,060,000	$	27,922,000
State income tax, net of federal tax benefits		2,554,000		4,599,000		2,308,000
Federal tax credits		(1,312,000)		(1,544,000)		(718,000)
Other		(419,000)		(1,010,000)		(1,162,000)
Total	$	30,445,000	$	35,105,000	$	28,350,000

Current and deferred income tax expense (benefit) is as follows:



	2016		2015		2014

Current:
Federal	$	19,676,000	$	25,578,000	$	40,475,000
State		3,963,000		7,302,000		4,227,000
Total current		23,639,000		32,880,000		44,702,000
Deferred:
Federal		6,828,000		2,373,000		(15,913,000)
State		(22,000)		(148,000)		(439,000)
Total deferred		6,806,000		2,225,000		(16,352,000)
Total expense	$	30,445,000	$	35,105,000	$	28,350,000

Recently Enacted Tax Regulations – On September 13, 2013, the IRS released final tangible property regulations under Sections 162(a) and 263(a) of the Internal Revenue Code regarding the deduction and capitalization of expenditures related to tangible property as well as dispositions of tangible property. These regulations were effective for the Company’s fiscal year ended September 26, 2015 and did not have a material impact on the Company’s consolidated results of operations, cash flows or financial position for the fiscal years ended September 24, 2016 and September 26, 2015.