The following temporary differences gave rise to the net deferred tax asset at December 31, 2018 and 2017.

(Dollars in thousands)	2018			2017
Deferred tax assets:
Allowance for loan and lease losses	$	1,763		$	1,597
Loan fees		136			105
Deferred compensation		508			221
Benefit plans		134			320
Unrealized loss on securities		862			574
Sale/leaseback adjustment		66			72
Business combination adjustments		1,692			358
Acquired NOL and charitable contribution carryforwards		1,391			—
Acquired AMT carryforward		1,433			—
Other		128			108
		8,113			3,355

Deferred tax liabilities:
Depreciation		(1,073	)		(619	)
Bond accretion		(29	)		(9	)
Goodwill and intangibles		(348	)		(329	)
Prepaid expenses		(515	)		(333	)
Business combination adjustments		(948	)		(176	)
Benefit plans		(459	)		—
Other		(45	)		(1	)
		(3,417	)		(1,467	)
Deferred tax asset, net	$	4,696		$	1,888

As reflected Notes 4 and 5, a substantial portion of the net deferred tax asset increase year-over-year relates to the deferred tax assets generated by or acquired from the mergers of Scottdale and First Priority.

At December 31, 2018, the Company had no valuation allowance established against its NOL and charitable contribution carryforwards, as management believes the Corporation will generate sufficient future taxable income to fully utilize these deferred tax assets. The charitable contribution carryforwards will expire between 2019 and 2021. The Tax Cuts and Jobs Act enacted on December 22, 2017 repealed Corporate Alternative Minimum Tax (AMT). As a result, AMT carryforwards as of December 31, 2018 will be systematically refunded with each return until fully refunded no later than the filing of the Corporation’s December 31, 2021 tax return. At December 31, 2018, Mid Penn had net operating loss carryforwards of $5,465,000 which are all due to acquisitions that occurred in 2018 and are available to offset future taxable income. The NOL carryforwards do not expire, however, Mid Penn is limited to a deduction of the lesser of the available NOL carryforward or 80 percent of pre-NOL deductible taxable income in a single tax year as set forth in the Tax Cuts and Jobs Act. Due to the fact that these NOLs were acquired, there are Section 382 limitations that establish the amount allowable to be used to offset taxable income in the amount of $1,854,000 per year.

In assessing the realizability of federal or state deferred tax assets, management considers whether it is more likely than not some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and prudent, feasible and permissible as well as available tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that Mid Penn will realize the benefits of these deferred tax assets.

On December 22, 2017, the TCJA was signed into law, reducing the federal tax rate to 21% beginning on January 1, 2018. The revaluation of net deferred tax assets as of December 22, 2017 resulted in $1,169,000 of additional tax expense on the date of enactment included in deferred expense in the tables below.

(Dollars in thousands)	2018		2017		2016
Current expense	$	812	$	2,672	$	2,613
Deferred expense (benefit)		1,317		1,828		(336	)
Total provision for income taxes	$	2,129	$	4,500	$	2,277

A reconciliation of income tax at the statutory rate of 21% for 2018 and 34% for 2017 and 2016 to Mid Penn's effective rate is as follows:

(Dollars in thousands)	2018			2017			2016
Provision at the expected statutory rate	$	2,672		$	3,940		$	3,428
Effect of tax-exempt income		(704	)		(668	)		(1,089	)
Effect of investment in life insurance		(60	)		(89	)		(90	)
Nondeductible interest		40			30			41
Nondeductible merger and acquisition expense		193			191			—
Rate change adjustment		—			1,169			—
Other items		(12	)		(73	)		(13	)
Provision for income taxes	$	2,129		$	4,500		$	2,277

Mid Penn has no unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. Mid Penn does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months.

No amounts for interest and penalties were recorded in income tax expense in the consolidated statement of income for the years ended December 31, 2018, 2017, or 2016. There were no amounts accrued for interest and penalties at December 31, 2018 or 2017.

Mid Penn and its subsidiaries are subject to U.S. federal income tax and income tax for the state of Pennsylvania. With limited exceptions, Mid Penn is no longer subject to examination by taxing authorities for years before 2015.