INCOME TAXES

In accordance with interim reporting requirements, IDACORP and Idaho Power use an estimated annual effective tax rate for computing their provisions for income taxes. An estimate of annual income tax expense (or benefit) is made each interim period using estimates for annual pre-tax income, income tax adjustments, and tax credits. The estimated annual effective tax rates do not include discrete events such as tax law changes, examination settlements, accounting method changes, or adjustments to tax expense or benefits attributable to prior years. Discrete events are recorded in the interim period in which they occur or become known. The estimated annual effective tax rate is applied to year-to-date pretax income to determine income tax expense (or benefit) for the interim period consistent with the annual estimate. In subsequent interim periods, income tax expense (or benefit) for the period is computed as the difference between the year-to-date amount reported for the previous interim period and the current period's year-to-date amount.

Income Tax Expense

The following table provides a summary of income tax expense for the six months ended June 30 (in thousands of dollars):



	IDACORP						Idaho Power
	2015			2014			2015			2014
Income tax at statutory rates (federal and state)	$	41,158		$	37,161		$	40,969		$	37,123
First mortgage bond redemption costs	(7,210		)	—			(7,210		)	—
Affordable housing tax credits	(1,615		)	(2,524		)	—			—
Affordable housing investment amortization, net of statutory taxes	749			1,344			—			—
Other⁽¹⁾	(17,329		)	(12,883		)	(16,782		)	(12,733		)
Income tax expense	$	15,753		$	23,098		$	16,977		$	24,390
Effective tax rate	15.0		%	24.3		%	16.2		%	25.7		%

⁽¹⁾ "Other" is primarily comprised of the net tax effect of Idaho Power's regulatory flow-through tax adjustments. These adjustments, which include the capitalized repairs deduction, are each listed in the rate reconciliation table in Note 2 to the consolidated financial statements included in IDACORP's and Idaho Power's Annual Report on Form 10-K for the year ended December 31, 2014.

The reductions in income tax expense for the six months ended June 30, 2015, as compared with the same period in 2014, were primarily due to the flow-through income tax benefit related to the current income tax deduction for bond redemption costs incurred in the second quarter of 2015. On a net basis, Idaho Power’s estimate of its annual 2015 regulatory flow-through tax adjustments is comparable to 2014; additionally, the 2015 capitalized repairs deduction estimate is slightly greater than the prior year estimate.