Our effective tax rate was 20.6% for the third quarter and 21.8% for the nine months of 2019, compared with (137.3)% for the third quarter and (15.0)% for the nine months of 2018. The 2019 tax rates include a benefit of $90 million from the reduction of a valuation allowance on certain tax loss carryforwards and an expense of $50 million from the impact on our deferred taxes attributable to a recently enacted lower tax rate in the Netherlands. The 2019 tax rates were also favorably impacted by the TCJA, which resulted in benefits of approximately $60 million during the third quarter and $230 million for the nine months of 2019, primarily from the lower statutory tax rate on fiscal 2019 earnings. The tax rate for the nine months of 2019 also benefited by approximately $60 million from accelerated deductions claimed on our 2018 U.S. income tax return. The 2018 tax rates were favorably impacted by a provisional benefit of $1.15 billion from the remeasurement of our net U.S. deferred tax liability and a provisional benefit of $36 million from foreign tax credits exceeding the one-time transition tax on previously deferred foreign earnings. In addition to these provisional amounts, we recognized a $204 million benefit from a $1.5 billion contribution to our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”) in February 2018 and $165 million related to the phase-in of a reduced statutory tax rate on 2018 year-to-date earnings, of which approximately $120 million was recorded in the third quarter and attributable to the first half of 2018 earnings.

On January 15, 2019, the U.S. Treasury Department issued final regulations covering the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the TCJA. Certain guidance included in these final regulations is inconsistent with our interpretation that led to the recognition of a $225 million ($0.94 per diluted share) benefit in 2018 (the “2018 Benefit”). Notwithstanding this inconsistency, we remain confident in our interpretation of the TCJA and intend to defend this position through litigation, if necessary. However, if we are ultimately unsuccessful in defending our position, we may be required to reverse the 2018 Benefit.

During the third quarter of 2019, we completed our accounting for the tax effects of the TCJA. No additional adjustments were made during the quarter. As a result, the only adjustment to the amounts initially recorded on a provisional basis in 2018 was a tax expense of $4 million recognized in the second quarter of 2019 as a revision of the provisional benefit associated with the remeasurement of our net U.S. deferred tax liability.

The TCJA, enacted during the third quarter of fiscal 2018, significantly changed the U.S. corporate income tax system including, among other things, lowering the statutory federal income tax rate from 35% to 21%. Due to our May 31 fiscal year-end, the lower rate was phased in, resulting in a U.S. statutory federal rate of 29.2% for 2018 and a statutory federal rate of 21% for subsequent years.

The following table provides a reconciliation of the 2018 effective tax rates to the 2019 effective tax rates, including the impacts of the TCJA, for the periods ended February 28:

	Three Months Ended			Nine Months Ended
2018 Effective Tax Rate^(a)		(137.3	)%		(15.0	)%
Remeasurement of net U.S. deferred tax liability in 2018		131.5			38.5
Effect of February 2018 pension contribution^(b)		23.3			6.8
Lower statutory tax rate on first-half 2018 earnings (35% to 29.2%)^(c)		12.5			—
Reduction of valuation allowance on tax loss carryforwards in 2019		(10.3	)		(3.0	)
Lower statutory tax rate on 2019 earnings (29.2% to 21%)^(c)		(7.6	)		(7.6	)
Remeasurement of net Dutch deferred tax asset in 2019		5.3			1.5
Transition tax provisional benefit in 2018		4.1			1.2
Foreign tax credits on foreign dividends in 2018		1.2			2.9
Accelerated deductions claimed in 2019 on the 2018 U.S. income tax return		—			(1.8	)
Other, net^(d)		(2.1	)		(1.7	)
2019 Effective Tax Rate^(a)		20.6	%		21.8	%

^(a)

2018 includes a blended U.S. statutory federal income tax rate of 29.2% while 2019 includes the fully phased-in rate of 21%.

^(b)

The benefit is from the pension contribution deducted on our 2017 tax return at a tax rate of 35%.

^(c)

Due to our May 31 fiscal year-end, the TCJA’s lower U.S. statutory federal income tax rate that went into effect on December 22, 2017 was phased in resulting in a rate of 29.2% for 2018 and a rate of 21% for subsequent years.

^(d)

The 2018 tax rates were negatively impacted by the effect of the NotPetya cyberattack, costs incurred in connection with the integration of foreign operations of FedEx Express and TNT Express B.V. (“TNT Express”), changes in uncertain tax positions and tax rate impacts on changes in deferred tax items after the TCJA enactment, and were favorably impacted from tax benefits from share-based payments.