Note 13. Income Taxes
We are not a taxable entity for U.S. federal income tax purposes or for the majority of states that impose an income tax. Taxes are generally borne by our partners through the allocation of taxable income, and accordingly for the periods subsequent to the IPO, we do not record deferred taxes related to the aggregate difference in the basis of our assets for financial and tax reporting purposes.
We recorded a de minimis state tax provision for the year ended December 31, 2017 associated with a Texas Margin Tax. The income tax provision for the years ended December 31, 2016 and December 31, 2015 consists of the following:
|
| | | | | | | |
| Year Ended December 31, |
(in thousands) | 2016 | | 2015 |
Current | $ | 15,450 |
| | $ | 164 |
|
Deferred | 12,838 |
| | 23,062 |
|
Total Income Tax Provision | $ | 28,288 |
| | $ | 23,226 |
|
Effective Tax Rate | 24.9 | % | | 37.9 | % |
The increase in income tax expense for the year ended December 31, 2016 as compared with the year ended December 31, 2015 was primarily due to an increase in income before income taxes earned prior to the IPO, which is subject to federal and state income tax. The increase in income tax expense was partially offset by the impact of the Partnership’s non-taxable status for the period beginning on the IPO date and ending on December 31, 2016.
Our effective tax rate for the year ended December 31, 2016 varied as compared with the year ended December 31, 2015 primarily due to the Partnership’s U.S. federal income tax status as a non-taxable entity for the period subsequent to the IPO. The effective tax rate for the period beginning on January 1, 2016 and ending on the IPO date was 38.1%.
See Note 2. Summary of Significant Accounting Policies and Basis of Presentation above for discussion of elimination of current and deferred tax liabilities prior to the IPO.