Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the provision (benefit) for income taxes for each of the three years in the period ended December 31, 2024 are as follows:

	Year ended December 31,
	2024		2023		2022
Current
Federal	$	628	$	561	$	(34)
Foreign	64		66		100
State and local	140		125		94
	832		752		160
Deferred
Federal	(8)		5		525
Foreign	(1)		13		(16)
State and local	(10)		17		28
	(19)		35		537
Total	$	813	$	787	$	697

A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate of 21 percent to the income before provision (benefit) for income taxes for each of the three years in the period ended December 31, 2024 is as follows:

	Year ended December 31,
	2024		2023		2022
Computed tax at statutory tax rate	$	712	$	674	$	588
State income taxes, net of federal tax benefit	100		116		102
Other permanent items	(11)		(3)		18
Change in federal valuation allowance	—		(15)		15
Foreign restructuring (1)	—		—		(37)
Foreign tax rate differential	12		15		11
Total	$	813	$	787	$	697

 

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(1)    Reflects the impact of aligning the legal entity structure in Australia and New Zealand with our other foreign operations, which resulted in a tax depreciation benefit.

The components of deferred income tax assets (liabilities) are as follows:

	December 31, 2024		December 31, 2023
Reserves and allowances	$	209	$	193
Debt cancellation and other	16		17
Net operating loss and credit carryforwards	71		97
Operating lease assets	343		287
Total deferred tax assets	639		594
Less: valuation allowance	(5)		(4)
Total net deferred tax assets	634		590
Property and equipment, including rental equipment	(2,893)		(2,921)
Operating lease liabilities	(343)		(285)
Intangibles	(81)		(85)
Interest carryforward	(2)		—
Total deferred tax liability	(3,319)		(3,291)
Total net deferred tax liability	$	(2,685)	$	(2,701)

The following table summarizes the activity related to unrecognized tax benefits, some of which would impact our effective tax rate if recognized:

	2024		2023		2022
Balance at January 1	$	26	$	16	$	13
Additions for tax positions related to the current year	2		3		1
Additions for tax positions of prior years	9		8		7
Lapse of statute of limitations	(1)		—		—
Settlements	(1)		(1)		(5)
Balance at December 31	$	35	$	26	$	16

We include interest accrued on the underpayment of income taxes in interest expense, net, and penalties, if any, related to unrecognized tax benefits in selling, general and administrative expense. The amounts of such interest or penalties were not material ($5 or less) in each of the years ended December 31, 2024, 2023 and 2022. We believe that it is reasonably possible that a decrease of up to $12 in federal and state unrecognized tax benefits may be necessary within the next year, as a result of settlements.

We file income tax returns in the U.S., Canada and Europe. Without exception, we have completed our domestic and international income tax examinations, or the statute of limitations has expired in the respective jurisdictions, for years prior to 2012.

For financial reporting purposes, income before provision for income taxes for our foreign subsidiaries was $232, $285 and $233 for the years ended December 31, 2024, 2023 and 2022, respectively.

We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes were provided on such earnings prior to the fourth quarter of 2020. In 2021, we remitted the cumulative amount of identified cash in our foreign operations in excess of near-term working capital needs. The taxes recorded associated with the remitted cash were immaterial. We continue to expect that the remaining balance of our undistributed foreign earnings will be indefinitely reinvested. If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes. At December 31, 2024, unremitted earnings of foreign subsidiaries were $1.460 billion. Determination of the amount of unrecognized deferred tax liability on these unremitted earnings is not practicable.

We have no remaining net operating loss carryforwards (“NOLs”) for federal income tax purposes, $12 of NOLs for foreign income tax purposes (the majority of which has an indefinite life) and $278 of NOLs for state income tax purposes that expire from 2025 through 2034.

The European Union (“EU”) member states formally adopted the EU’s Pillar Two Directive, which was established by the Organization for Economic Co-operation and Development, and which generally provides for a 15 percent minimum effective tax rate for multinational enterprises, in every jurisdiction in which they operate. While we do not anticipate that this will have a material impact on our tax provision or effective tax rate, we continue to monitor evolving tax legislation in the jurisdictions in which we operate.