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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income tax expense from continuing operations for the years ended December 31, are comprised of the following:
(in thousands)202420232022
Current
Federal$29,518 $— $— 
State17,457 12,250 11,327 
Foreign6,823 7,382 6,204 
Deferred
Federal(23,990)80,698 63,585 
State(19,197)27,276 8,917 
Foreign(2,136)(1,031)(1,170)
Total income tax expense from continuing operations$8,475 $126,575 $88,863 
Income tax expense from continuing operations differed from the amount computed by applying the US statutory income tax rate of 21% to the income from continuing operations before income taxes as follows for the years ended December 31:
(in thousands)202420232022
Income from continuing operations before income tax
US$18,686 $444,557 $341,412 
Foreign17,918 23,862 23,792 
Total income from continuing operations before income tax$36,604 $468,419 $365,204 
US Federal statutory income tax expense$7,687 $98,368 $76,693 
Effect of tax rates in foreign jurisdictions1,175 1,434 1,085 
State income tax expense, net of federal benefit784 25,412 17,078 
Valuation allowances2,776 (815)(6,907)
Non-deductible (non-taxable) items677 775 1,147 
Non-deductible executive compensation1,813 2,014 1,258 
Tax credits(6,988)(396)(161)
Uncertain tax positions(791)(523)(804)
Tax law changes (excluding valuation allowance) (a)
(166)(50)(94)
Other1,508 356 (432)
Income tax expense from continuing operations $8,475 $126,575 $88,863 
Effective income tax rate23.15 %27.02 %24.33 %
(a) Tax law changes primarily represent changes in tax law in foreign jurisdictions.
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as net operating losses and carryforwards. Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows:
(in thousands)20242023
Deferred tax assets
Deferred interest expense$118,228 $116,982 
Employee benefit plans10,408 9,079 
Accrued liabilities5,011 5,996 
Allowance for credit losses25,828 21,964 
Deferred revenue60,907 57,494 
Operating lease liability66,925 61,849 
Other12,397 5,006 
Tax loss carryforwards75,312 99,676 
Deferred tax assets, gross375,016 378,046 
Valuation allowance(4,206)(1,430)
Net deferred income tax asset$370,810 $376,616 
Deferred tax liabilities
Rental equipment and other property, plant and equipment$(791,853)$(808,873)
Intangible assets(18,106)(60,358)
Right of use asset(66,508)(61,653)
Deferred tax liability(876,467)(930,884)
Net deferred income tax liability$(505,657)$(554,268)
The Company's valuation allowance increased by $2.8 million from 2023, related to capital loss generated from the McGrath termination fee that is not more likely than not realizable in certain states that do not allow capital loss carryback or carryforward.
Tax loss carryforwards as of December 31, 2024 are outlined in the table below and include US Federal and US state. The availability of these tax losses to offset future income varies by jurisdiction. Furthermore, the ability to utilize the tax losses may be subject to additional limitations upon the occurrence of certain events, such as a change in the ownership of the Company. Some of the Company’s tax attributes are subject to annual limitations due to historical changes in ownership from acquisitions, mergers or other related ownership shift events; however, the Company anticipates that our remaining available net operating losses will be consumed prior to their expiration. The Company’s tax loss carryforwards are as follows at December 31, 2024:
(in thousands)Loss
Carryforward		Deferred TaxExpiration
Jurisdiction:
US - Federal $105,115 $22,074 2031, Indefinite
US - Capital Loss180,000 44,742 2029
US - State190,330 8,496 2025 – 2043, Indefinite
Total$475,445 $75,312 
As of December 31, 2024, the total amount of the basis difference in investments outside the US, which are indefinitely reinvested and for which deferred taxes have not been provided, is approximately $162.0 million. The tax, if any, associated with the recovery of the basis difference is dependent on the manner in which it is recovered and is not readily determinable.
Unrecognized Tax Positions
The Company is subject to taxation in US, Canada, Mexico, India, and state jurisdictions. The Company’s tax returns are subject to examination by the applicable tax authorities prior to the expiration of statute of limitations for assessing additional taxes, which generally ranges from two to five years after the end of the applicable tax year. As of December 31, 2024, generally, tax years for 2018 through 2023 remain subject to examination by the tax authorities. In addition, in certain taxing jurisdictions, in the case of carryover tax attributes to years open for assessment, such attributes may be subject to reduction by taxing authorities.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in thousands)202420232022
Unrecognized tax benefits – January 1,$43,134 $43,627 $44,314 
Decrease from expiration of statute of limitations(a)
(16,624)(493)(687)
Unrecognized tax benefits – December 31,$26,510 $43,134 $43,627 
(a) Includes $15.8 of presentational adjustments with no effect on amounts presented in the consolidated balance sheet or the annual effective tax rate for the year ended December 31, 2024.
At December 31, 2024 there were $25.8 million of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.
The Company classifies interest on tax deficiencies and income tax penalties within income tax expense. During the years ended December 31, 2024, 2023, and 2022, the Company recognized approximately $(0.2) million, $0.0 million, and $(0.1) million in interest, respectively. The Company accrued approximately $0.2 million and $0.4 million for the payment of interest at December 31, 2024 and 2023, respectively.
Future tax settlements or statute of limitation expirations could result in a change to the Company’s uncertain tax positions. As of December 31, 2024, the Company believes that it is reasonably possible that approximately $0.2 million of unrecognized tax benefits could decrease in the next twelve months as a result of the expiration of statutes of limitation, audit settlements or resolution of tax uncertainties.