INCOME TAXES

The components of income tax expense for the years ended December 31, 2019 and 2018, are as follows:



In thousands	2019		2018
Federal:
Current	$	5,169	$	4,036
Deferred	122		388
	5,291		4,424
State:
Current	338		479
Deferred	16		69
	354		548
	$	5,645	$	4,972

Reconciliations of the statutory federal income tax to the income tax expense reported in the consolidated statements of income for the years ended December 31, 2019 and 2018, are as follows:



	Percentage of Income before Income Taxes
	2019		2018
Federal income tax at statutory rate	21.0	%	21.0	%
State income taxes, net of federal benefit	1.0	%	1.6	%
Tax-exempt income	(1.5	)%	(1.7	)%
Earnings on investment in bank-owned life insurance	(0.8	)%	(0.9	)%
Rehabilitation and low-income housing credits	(1.0	)%	(1.1	)%
Reduction of federal tax rate	—	%	—	%
Other	0.5	%	(0.3	)%
	19.2	%	18.6	%

The provision for federal income taxes includes $0 and $46,000 of income taxes related to net gains on sales of securities in 2019 and 2018, respectively. Rehabilitation and low-income housing income tax credits were $281,000 and $287,000, during 2019 and 2018, respectively.

Components of deferred tax assets and liabilities at December 31 were as follows:



In thousands	2019		2018
Deferred tax assets:
Allowance for loan losses	$	2,995	$	3,054
Available for sale securities	—		409
Accrued deferred compensation	941		884
Pension	2,033		2,207
Other-than-temporary impairment	43		43
Nonaccrual interest	194		192
Deferred director fees	664		589
Acquisition accounting	377		785
Other	604		602
	7,851		8,765
Deferred tax liabilities:
Deferred loan fees	94		101
Available for sale securities	391		—
Prepaid pension benefit cost	4,154		4,289
Prepaid expenses	129		130
Accumulated depreciation	221		347
Goodwill/intangibles	1,181		1,056
	6,170		5,923
Net Deferred Tax Asset included in Other Assets	$	1,681	$	2,842

The Corporation did not have any uncertain tax positions at December 31, 2019 and 2018. The Corporation’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Income.

Years that remain open for potential review by the Internal Revenue Service are 2016 through 2019.