4. Income taxes

Our Provision for income taxes was $504 million and $363 million for the third quarters of 2017 and 2016, respectively. The increase was primarily due to higher income before income taxes. Our Provision for income taxes was $1.19 billion and $885 million for the first nine months of 2017 and 2016, respectively. The increase was due to higher income before income taxes.

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 Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Taxes calculated using the estimated annual effective tax rate	$	542		$	418		$	1,382		$	1,024
Discrete tax items		(38	)		(55	)		(190	)		(139	)
Provision for income taxes	$	504		$	363		$	1,192		$	885

Estimated annual effective tax rate		31	%		30	%		31	%		30	%
Actual effective tax rate		28	%		26	%		26	%		26	%