The effective tax rate for income from continuing operations in the first six months of 2014 was 35.6% compared to 32.6% in the first six months of 2013. The significant differences between the U.S. federal statutory rate and the effective income tax rate for continuing operations for the six months ended June 30, 2014 and 2013 are as follows:



	Percent of Income Before Income Taxes
Six Months Ended June 30	2014		2013
Income tax expense at federal statutory rate	35.0		35.0
State taxes, net of federal income tax benefit	2.0		2.2
Income tax contingency accruals and tax settlements	1.7		0.6
Unremitted earnings from foreign operations	1.0		0.7
Changes in estimates related to prior year tax provision	0.3		(0.4	)
Non-deductible expenses	0.2		0.6
Valuation allowance for foreign operating loss carry-forwards	—		1.4
Research and development tax credit	—		(1.6	)
Foreign rate differences	(0.4	)	(0.2	)
Foreign tax incentives	(0.5	)	(5.6	)
Valuation allowance for capital loss carry-forwards	(1.3	)	1.2
Domestic production activities deduction	(2.3	)	(1.3	)
Other	(0.1	)	—
Effective income tax rate for income from continuing operations	35.6		32.6

The Brazilian federal statutory income tax rate is a composite of 34.0% (25.0% of income tax and 9.0% of social contribution on income). Terphane Holdings, LLC’s (“Terphane”) manufacturing facility in Brazil is the beneficiary of certain income tax incentives that allow for a reduction in the statutory Brazilian federal income tax rate levied on the operating profit of its products. These incentives produce a current effective tax rate of 15.25% for Terphane Ltda. (6.25% of income tax and 9.0% social contribution on income). The current incentives will expire at the end of 2014, but the Company anticipates that it will qualify for additional incentives that will extend beyond 2014. The benefit from tax incentives was $0.1 million (0 cents per share) and $1.6 million (5 cents per share) in the first six months of 2014 and 2013, respectively.

Tredegar and its subsidiaries file income tax returns in the U.S., various states and jurisdictions outside the U.S. With few exceptions, Tredegar and its subsidiaries are no longer subject to state or non-U.S. income tax examinations by tax authorities for years before 2010.