Good day and welcome to the NorthWestern Corporation Fourth Quarter 2017 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to your IR Officer, Mr. Travis Meyer. Please go ahead, sir.
Thank you, Evan. Good afternoon and thank you for joining NorthWestern Corporation's financial results conference call and webcast for the full year ending December 31, 2017. NorthWestern's results have been released and the release is available on our website at northwesternenergy.com. We also released our 10-K pre-market this morning.
On the call with us today are Bob Rowe, President and CEO, Brian Bird, VP and CFO, along with several other members of the management team in the room with us today to address your questions.
(Forward-Looking Cautionary Statements)
Following our presentation, we will open up the phone lines to allow those dialed into the teleconference to ask questions. The archived replay of today's webcast will be available beginning at 6:00 p.m. Eastern today and can be found on our website, again, that's northwesternenergy.com under the Our Company, Investor Relations, Presentations and Webcasts link. To access the audio replay of the call, please dial 888-203-1112 then access code 5682232, again that's 5682232.
I will now hand the presentation over to our CEO, Bob Rowe.
Thank you and good afternoon, everyone and thank you for joining us. And we just completed successful board meeting and are enjoying a crisp, clear wintry day in South Dakota. First, recent significant activities, 2017 operating income increased $15.5 million as compared to 2016 due primarily to improved gross margin driven by favorable weather as well as customer growth. 2017 net income was down $1.5 million as compared to 2016 and that is due primarily to a $17 million tax benefit that was included in our 2016 results. GAAP diluted earnings per share was $3.34 in 2017 and that's converted to $3.39 in 2016, a 1.5% decline.
Non-GAAP adjusted EPS was $3.30 in 2017, which remains flat with 2016 and Brian will cover off more on GAAP to non-GAAP comparisons and disclosures. The Board declared a quarterly dividend of $0.55 per share, a 4.8% increase payable on March 30 to shareholders of record as of March 15. And on February 5, Fitch, on one hand, affirmed Northwestern debt ratings, but revised its outlook from stable to negative writing at a series of unfavorable rulings by the Montana Public Service Commission have weighed on Northwestern Energy's credit quality.
And with that, I will turn over to Brian to begin with the summary of financial results.
Thanks Bob. Net income for 2017 was $162.7 million, which was approximately $1.5 million or just under 1% less than 2016. As you see on page 4 the primary driver for that decline was in the income tax expense line. We had over $21 million of incremental income taxes on a year-over-year basis. As a result, as you look at the income before taxes we had a nice improvement approximately $19.5 million