4. Income taxes

Our Provision for income taxes was $430 million and $283 million in the second quarters of 2017 and 2016, respectively. The increase was due to higher income before income taxes. Our Provision for income taxes was $688 million and $522 million in the first six months of 2017 and 2016, respectively. The increase was due to higher income before income taxes, partially offset by discrete tax items, which were primarily related to stock-based compensation.

Our estimated annual effective tax rate is about 31 percent, which does not include discrete tax items. This differs from the 35 percent statutory corporate tax rate due to the effect of U.S. tax benefits and lower statutory tax rates applicable to our operations in many of the jurisdictions in which we operate. These lower non-U.S. tax rates are generally statutory in nature, without expiration and available to companies that operate in those taxing jurisdictions.

Provision for income taxes is based on the following:

	For Three Months Ended						For Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Taxes calculated using the estimated annual effective tax rate	$	458		$	325		$	840		$	606
Discrete tax items		(28	)		(42	)		(152	)		(84	)
Provision for income taxes	$	430		$	283		$	688		$	522

Estimated annual effective tax rate		31	%		30	%		31	%		30	%
Actual effective tax rate		29	%		26	%		25	%		25	%