6. Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The Tax Act significantly revised the U.S. corporate income tax law by, among other things, decreasing the federal corporate income tax rate from 35% to 21% effective January 1, 2018.

SEC Staff Accounting Bulletin No. 118 (SAB 118) addresses situations when a company has not completed the accounting for certain income tax effects of the Tax Act and provides a measurement period of up to one year after the enactment date for the accounting to be completed. The Company recorded a provisional credit to federal tax expense of $2.4 million in 2017 from remeasuring deferred tax assets and deferred tax liabilities due to the Tax Act. Any subsequent adjustment to these amounts, if any, will be recorded to provision for income taxes in 2018. No adjustment was made to the provisional credit recorded in 2017 in the six months ended June 30, 2018.

The effective tax rate for the three months and six months ended June 30, 2018 and 2017 differs from the U.S. federal statutory rate primarily as a result of certain non-deductible expenses and state and local income taxes and for 2018, tax benefits from share-based compensation activity. The provision for income taxes was $6.3 million and $1.3 million, or 25.3% and 36.1% of pre‐tax income for the three months ended June 30, 2018 and 2017, respectively. For the six months ended June 30, 2018 and 2017, the provision for income taxes was $9.9 million and $4.2 million, or 25.3% and 38.3% of pre-tax income, respectively.

The effective tax rate for the three months and six months ended June 30, 2018 was significantly lower than the effective tax rate for the three months and six months ended June 30, 2017 due mainly to the reduction in the federal corporate income tax rate effective January 1, 2018.

No valuation allowance was recorded for deferred tax assets in the periods ended June 30, 2018 and 2017.