(6) INCOME TAXES

Income tax expense was as follows (in thousands):

		Three Months Ended March 31,
		2018			2017
Income tax expense	$	42,676		$	112,395
Effective tax rate		46.4	%		39.8	%

We compute our quarterly taxes under the effective tax rate method based on applying an anticipated annual effective rate to our year-to-date income, except for discrete items. Income taxes for discrete items are computed and recorded in the period that the specific transaction occurs. For first quarter ended March 31, 2018 and 2017, our overall effective tax rate was different than the federal statutory rate due primarily to state income taxes (including adjustments to state income tax valuation allowances), equity compensation and other tax items which are detailed below (in thousands).

		Three Months Ended March 31,
		2018			2017
Total income before income taxes	$	91,914		$	282,506
U.S. federal statutory rate		21	%		35	%
Total tax expense at statutory rate		19,302			98,877

State and local income taxes, net of federal benefit		4,494			8,982
Non-deductible executive compensation		262			140
Tax less than book equity compensation		664			2,524
Change in valuation allowances:
Federal net operating loss carryforwards & other		—			856
State net operating loss carryforwards & other		15,678			2,086
Rabbi trust and other		1,381			(1,122	)
Permanent differences and other		895			52
Total expense for income taxes	$	42,676		$	112,395
Effective tax rate		46.4	%		39.8	%

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. The law significantly reformed the Internal Revenue Code of 1986, as amended. The reduction in the corporate tax rate required a one-time revaluation of certain tax related assets and liabilities to reflect their value at the lower corporate tax rate of 21%. Due to the complexities involved in the accounting for the enactment of the new law, the SEC Staff Accounting Bulletin (“SAB”) 118 allowed a provisional estimate for the year ended December 31, 2017, which we made. As of March 31, 2018, we have not made any material adjustments to our provisional estimate at year-end 2017. We have made a reasonable estimate of the effect on our deferred tax balances. We will continue to analyze the impact of the new law and additional impacts will be recorded as they are identified during the measurement period provided for in SAB 118.