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:


	2018		2017
Deferred tax liabilities:
Property and equipment tax/book differences	$	87,577,000	$	89,089,000
Property tax method		1,156,000		1,575,000
Total deferred tax liabilities		88,733,000		90,664,000
Deferred tax assets:
Insurance reserves		4,790,000		7,872,000
Advance payments on purchases contracts		761,000		1,207,000
Vacation accrual		1,652,000		2,471,000
State tax credits		—		4,000
Inventory		1,055,000		1,555,000
Deferred compensation		3,662,000		5,032,000
Other		2,352,000		2,605,000
Total deferred tax assets		14,272,000		20,746,000
Net deferred tax liabilities	$	74,461,000	$	69,918,000

At September 29, 2018 refundable current income taxes totaling $36.7 million, 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:



	2018		2017		2016
Federal tax at statutory rate	$	19,678,000	$	29,492,000	$	29,622,000
State income tax, net of federal tax benefits		3,528,000		2,774,000		2,554,000
Federal tax credits		(1,052,000)		(1,024,000)		(1,312,000)
Tax rate change on deferred tax balance as of Federal law enactment date		(26,680,000)		—		—
Tax method change		(10,606,000)		—		—
Tax rate change effect of FY18 current deferred activity		(2,124,000)		—		—
Other		210,000		(854,000)		(419,000)
Total	$	(17,046,000)	$	30,388,000	$	30,445,000

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



	2018		2017		2016
Current:
Federal	$	(21,596,000)	$	26,994,000	$	19,676,000
State		7,000		4,925,000		3,963,000
Total current		(21,589,000)		31,919,000		23,639,000
Deferred:
Federal		1,020,000		(1,104,000)		6,828,000
State		3,523,000		(427,000)		(22,000)
Total deferred		4,543,000		(1,531,000)		6,806,000
Total (benefit) expense	$	(17,046,000)	$	30,388,000	$	30,445,000

In December 2017, the Tax Cuts and Jobs Act (the “Tax Act”) became law. Among other things, the Tax Act reduced the federal corporate tax rate from 35% to 21% and allowed for full depreciation expensing of qualified property when placed in service.

As a result of the decrease in the effective tax rate, the Company recorded a decrease in its net deferred tax liabilities of $26.7 million, with a corresponding reduction to deferred income tax expense. During fiscal year 2018, the Company adopted a tax calculation method change that resulted in the accelerated deduction of certain property-related expenditures. As a result of this change and the aforementioned change in the federal corporate tax rate, the Company recorded an additional decrease in its net deferred tax liabilities of $10.6 million, with a corresponding reduction to deferred income tax expense.