Income Taxes

Consistent with authoritative guidance, our estimated annual effective tax rate is used to allocate our expected annual income tax provision to interim periods. The rate is the ratio of our estimated annual income tax provision to estimated pre-tax ordinary income and excludes "discrete items," which are significant, unusual or infrequent items reported separately, net of their related tax effect. The estimated annual effective tax rate is applied to the current interim period’s ordinary income to determine the income tax provision allocated to the interim period. The income tax effects of discrete items are then determined separately and recognized in the interim period in which the income or expense items arise.

For the three months ended March 31, 2016 and 2015, the effective tax rates attributable to continuing operations were as follows:



	Three Months Ended March 31,
	2016		2015
Statutory federal income tax rate	35.0	%	35.0	%
State taxes, net of credits	3.6		2.3
Change in valuation allowances	0.4		1.0
Federal manufacturing deduction	(1.7	)	(3.3	)
Change in uncertain tax positions	2.3		(13.4	)
Interest accrued on uncertain tax positions	0.1		0.1
Federal credits and audit adjustments	(0.7	)	(0.4	)
Return to provision adjustments	—		1.4
Other	(0.2	)	0.1
Effective tax rate	38.8	%	22.8	%

Our estimated annual effective tax rate for the first quarter of 2016 is approximately 36%, compared with approximately 35% for the comparable interim period in 2015. The increase is due to changes in state tax rates.

During the three months ended March 31, 2015, the Company reduced the reserve for uncertain tax positions due to statute expirations related to the research and development credit of approximately $1.0 million.