Income Tax Expense

6 Months Ended

Jun. 30, 2020

The following table provides information regarding the Company’s income tax expense for the three and six months ended June 30, 2020 and 2019, (dollars in thousands):


	Three Months ended June 30,									Six Months ended June 30,
	2020			2019			2020			2019
	(unaudited)									(unaudited)
Income tax expense	$	12,543		$	10,019		$	20,059		$	15,918
Effective tax rate	26.6		%	23.4		%	26.3		%	23.8		%

The increase in income tax expense and in the effective tax rate for the three and six months ended June 30, 2020, as compared to the same period in the prior year, was primarily attributable to higher income before taxes, an increase in the number of states in which the Company owes taxes, and an increase in non-deductible expenses as a result of the USWM Acquisition.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the U.S. economy and fund a nationwide effort to curtail the effect of the COVID-19 pandemic. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions which are expected to impact the

Company’s financial statements include removal of certain limitations on utilization of net operating losses and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act.

As of June 30, 2020, the Company expects that these provisions will not have a material impact as the Company does not have net operating losses that would fall under these provisions and does not expect interest expense to be limited. The ultimate impact of the CARES Act may differ from this estimate due to changes in interpretations and assumptions, guidance that may be issued and actions the Company may take in response to the CARES Act. The CARES Act is highly technical and complex and the Company will continue to assess the impact that various provisions will have on its business.