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Income Taxes | 3 Months Ended
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Mar. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Tredegar recorded tax expense of $4.0 million on pretax net income of $23.8 million in the first three months of 2019. Therefore, the effective tax rate in the first three months of 2019 was 16.9%, compared to 22.5% in the first three months of 2018. The quarterly effective tax rate is an estimate based on a proration of the components of the Company’s estimated annual effective tax rate. The significant differences between the U.S. federal statutory rate and the effective income tax rate for the three months ended March 31, 2019 and 2018 are as follows:
(In thousands, except percentages) | 2019 |  | 2018
Three Months Ended March 31, | Amount |  | % |  | Amount |  | %
Income tax expense at federal statutory rate | $ | 5,000 |  |  | 21.0 |  |  | $ | 4,925 |  |  | 21.0 |
U.S. Tax on Foreign Branch Income | 465 |  |  | 2.0 |  |  | 357 |  |  | 1.5 |
Foreign rate differences | 329 |  |  | 1.4 |  |  | 221 |  |  | 0.9 |
State taxes, net of federal income tax benefit | 180 |  |  | 0.8 |  |  | 321 |  |  | 1.4 |
Non-deductible expenses | 73 |  |  | 0.3 |  |  | 84 |  |  | 0.4 |
Global Intangible Low Tax Income (GILTI) | — |  |  | — |  |  | 32 |  |  | 0.1 |
Research and development tax credit | (86 | ) |  | (0.4 | ) |  | (100 | ) |  | (0.4 | )
Stock-based compensation | (133 | ) |  | (0.6 | ) |  | 173 |  |  | 0.7 |
Foreign Derived Intangible Income (FDII) | (194 | ) |  | (0.8 | ) |  | (153 | ) |  | (0.7 | )
Valuation allowance due to foreign losses and impairments | (253 | ) |  | (1.1 | ) |  | (362 | ) |  | (1.5 | )
Foreign tax incentives | (436 | ) |  | (1.8 | ) |  | (211 | ) |  | (0.9 | )
Tax impact of dividend received | (919 | ) |  | (3.9 | ) |  | — |  |  | — |
Effective income tax rate | $ | 4,026 |  |  | 16.9 |  |  | $ | 5,287 |  |  | 22.5 |
Tredegar accrues U.S. federal income taxes on unremitted earnings of all foreign subsidiaries where required. However, due to changes in the taxation of dividends under the U.S. Tax Cuts and Jobs Act of 2017, Tredegar will only record U.S. federal income taxes on unremitted earnings of its foreign subsidiaries where Tredegar cannot take steps to eliminate any potential tax on future distributions from its foreign subsidiaries. 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 Ltda.’s 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 to 15.25% levied on the operating profit on certain of its products. The incentives have been granted for a 10-year period, from the commencement date of January 1, 2015. The benefit from the tax incentives was $0.4 million and $0.2 million in the first three months of 2019 and 2018, respectively. Tredegar and its subsidiaries file income tax returns in the U.S., various states, and jurisdictions outside the U.S. With exceptions for some U.S. states and non-U.S. jurisdictions, Tredegar and its subsidiaries are no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2014. The Company includes tax-related interest and penalties in income tax expense. As of March 31, 2019, $0.2 million of interest and penalties are accrued as a tax liability. During the first quarter of 2019, no additional interest or penalties were recorded.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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