Income Taxes

The following table presents the Company’s provision for income taxes and effective income tax rate for the periods below:



	Three months ended November 30,
	2017			2016
Provision for income taxes	$	3,725		$	7,239
Effective income tax rate	24.6		%	35.6		%

The lower effective tax rate in the first quarter of fiscal year 2018 was primarily attributable to the recognition of excess tax benefits related to stock option exercises. Excess tax benefits in the amount of $1.7 million were recognized in the consolidated statements of income as a component of the provision for income taxes during the first quarter of fiscal year 2018, resulting in a favorable effective tax rate impact of 11%.

On December 22, 2017, the “Tax Cuts and Jobs Act” ("H.R. 1") was signed into law, significantly impacting several sections of the Internal Revenue Code. The Company is currently analyzing the impact of these changes; therefore, an estimate of the impact to income taxes is not yet available. The Company will remeasure all deferred tax assets and liabilities as of December 22, 2017, based on the provisions of H.R. 1, which include a reduction in the federal statutory tax rate from 35% to 21%. The impact of the remeasurement will be recorded in the second quarter. In addition to the reduction of the federal statutory tax rate, the H.R. 1 provisions currently being analyzed as having an impact on the Company's effective tax rate in fiscal years 2018 and 2019 include, but are not limited to, the following:

Changes effective fiscal year 2018 and future years:


•	Bonus depreciation expensing - increased from 50% to 100% for qualified property placed in service after September 27, 2017 and before 2023


•	Impact of H.R. 1 on state income taxes

Changes effective fiscal year 2019 and future years:


•	Interest expense limitations - net interest expense deduction is limited to 30% of adjusted taxable income


•	Repealed the tax deduction for qualified domestic production income


•	Employee compensation to covered employees (CEO and CFO plus next three highest compensated officers) in excess of $1 million is non-deductible.

The Company continues to work through all aspects of H.R. 1 to determine the impact on the Company’s financial statements.