STI 2018 Annual Report

Notes to Consolidated Financial Statements, continued 130 NOTE 16 - INCOME TAXES The components of the Provision for income taxes included in the Consolidated Statements of Income for the years ended December 31 are presented in the following table: (Dollars in millions) 2018 2017 2016 Current income tax provision: Federal $562 $129 $667 State 73 59 27 Total 635 188 694 Deferred income tax (benefit)/provision: Federal (122) 275 59 State 35 69 52 Total (87) 344 111 Total provision for income taxes $548 $532 $805 The 2017 Tax Act, enacted on December 22, 2017, reduced the U.S. federal corporate income tax rate from35%to 21%effective January 1, 2018. The Company recorded a $55 million and $303 million net income tax benefit for the effects of the 2017 TaxAct as a component of the provision for income taxes for the years ended December 31, 2018 and 2017, respectively. The $55 million adjustment completed the Company's accounting for the income tax effects of the 2017 Tax Act. The provision for income taxes does not reflect the tax effects of unrealized gains and losses and other income and expenses recorded in AOCI, with the exception of the remeasurement of the related DTAs and DTLs due to the enactment of the 2017 Tax Act. For additional information regarding AOCI, see Note 23, “Accumulated Other Comprehensive Loss.” A reconciliation of the income tax provision at the statutory federal income tax rate to the Company’s actual provision for income taxes and actual effective tax rate for the years ended December 31 are presented in the following table: 2018 2017 2016 (Dollars in millions) Amount % of Pre-Tax Income Amount % of Pre-Tax Income Amount % of Pre-Tax Income Income tax provision at federal statutory rate $698 21.0% $982 35.0% $939 35.0% Increase/(decrease) resulting from: State income taxes, net 85 2.6 92 3.3 59 2.2 Tax-exempt interest (67) (2.0) (90) (3.2) (86) (3.2) Income tax credits, net of amortization 1 (106) (3.2) (117) (4.2) (86) (3.2) Impact of the remeasurement of DTAs and DTLs and other tax reform-related items (55) (1.7) (303) (10.8) — — Other 2 (7) (0.2) (32) (1.1) (21) (0.8) Total provision for income taxes and effective tax rate $548 16.5% $532 19.0% $805 30.0% 1 Excludes income tax benefits of $84 million, $34 million, and $1 million for the years ended December 31, 2018, 2017, and 2016, respectively, related to tax credits, which were recognized as a reduction to the related investment asset. 2 Includes excess tax benefits of $22 million, $25 million, and $15 million for the years ended December 31, 2018, 2017, and 2016, respectively, related to the Company's adoption of ASU 2016-09. Deferred income tax assets and liabilities result from differences between the timing of the recognition of assets and liabilities for financial reporting purposes and for income tax purposes. These assets and liabilities are measured using the enacted federal and state tax rates expected to apply in the periods in which the DTAs or DTLs are expected to be realized. The net deferred income tax liability is recorded in Other liabilities in the Consolidated Balance Sheets.