USA TRUCK INC

NOTE

FEDERAL AND STATE INCOME TAXES

Significant components of the Company

’s deferred tax assets and liabilities are as follows (in thousands):

	Year Ended December 31,
	2017			201 6
Deferred tax assets:				(recast)
Accrued expenses not deductible until paid	$	6,062		$	7,231
Federal credits		--			2,023
Impairment loss on assets held for sale		--			1,090
Net operating loss carry forwards		496			731
Allowance for doubtful accounts		246			182
Equity incentive plan		178			265
Other		124			292
Revenue recognition		110			113
Total deferred tax assets		7,216			11,927

Deferred tax liabilitie s:
Tax over book depreciation		(26,806	)		(47,217	)
Prepaid expenses deductible when paid		(1,514	)		(2,375	)
Capital leases		(32	)		(235	)
Effect of adoption of share-based payment pronouncement ASU 2016-09		--			125
Total deferred tax liabilities		(28,352	)		(49,702	)
Net deferred tax liabilities	$	(21,136	)	$	(37,775	)

The Company

has certain state net operating loss carryovers that expire in varying years through

2036.

The Company expects to fully utilize

its

tax attributes in future years before they expire.

December 22, 2017

, the U.S. Government enacted the Tax Cuts and Jobs Act, which, among other things, reduces the federal corporate income tax rate from

35%

21%

effective

January 1, 2018.

In connection with the tax law change, the Company adjusted the measurement of it federal deferred tax assets and liabilities utilizing the rate which will be in effect when the differences reverse, which is generally

21%.

This adjustment resulted in a

$12.0

million reduction to our net deferred tax liability.

Significant components of the provision (benefit) for income taxes are as follows (in thousands):

	Year Ended December 31,
Current:	201 7			201 6			201 5
Federal	$	2,689		$	(3,420	)	$	4,526
State		190			(44	)		870
Total current		2,879			(3,464	)		5,396
Deferred:
Federal		(16,812	)		439			2,985
State		173			(494	)		(109	)
Total deferred		(16,639	)		(55	)		2,876
Total income tax (benefit) expense	$	(13,760	)	$	(3,519	)	$	8,272

A reconciliation between the effective income tax rate and the statutory federal income tax rate of

35%

is as follows (in thousands):

	Year Ended December 31,
	20 1 7			2 016			20 15
Income tax (benefit) expense at statutory federal rate	$	(2,190	)	$	(3,926	)	$	6,790
Federal income tax effects of:
State income tax expense (benefit)		76			188			(289	)
Per diem and other n ondeductible meals and entertainment		578			614			702
Impact of Tax Cuts and Jobs Act		(12,010	)		--			--
Other		--			143			306
Federal income tax (benefit) expense		(13,546	)		(2,981	)		7,509
State income tax (benefit) expense		(214	)		(538	)		763
Total income tax (benefit) expense	$	(13,760	)	$	(3,519	)	$	8,272

Effective tax rate		219.9	%		31.4	%		42.8	%

2017,

our effective rate varied from the federal statutory rate primarily due to

the Tax Cuts and Jobs Act being signed into law resulting in the recognition of an estimated

$12.0

million tax benefit from the adjustment in measurement of our net deferred tax liability.

2015

and

2016,

the effective rates varied from the statutory federal tax rate primarily due to state income taxes and certain non-deductible expenses including a per diem pay structure for drivers. Due to the partially nondeductible effect of per diem pay, the Company’s tax rate will change based on fluctuations in earnings (losses) and in the number of drivers who elect to receive this pay structure. Generally, as pretax income or loss increases, the impact of the driver per diem program on our effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pretax income or loss, while in periods where earnings are at or near breakeven the impact of the per diem program on our effective tax rate is significant.