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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes for the years ended December 31, 2024, 2023 and 2022 consisted of the following.
202420232022
U.S.$383.7 $356.0 $267.5 
Non-U.S.749.1 675.1 474.7 
Income before income taxes$1,132.8 $1,031.1 $742.2 
The following table details the components of the Provision for income taxes for the years ended December 31, 2024, 2023 and 2022.
202420232022
Current:
U.S. federal$87.5 $111.5 $66.5 
U.S. state and local22.8 23.7 21.5 
Non-U.S.185.3 181.7 147.4 
Deferred:
U.S. federal(9.7)(44.0)(37.3)
U.S. state and local(5.7)(6.9)(5.5)
Non-U.S.(17.7)(26.0)(43.0)
Provision for income taxes$262.5 $240.0 $149.6 
Certain prior period amounts within this Note have been reclassified to conform to the current period presentation.
The U.S. federal corporate statutory rate is reconciled to the Company’s effective income tax rate for the years ended December 31, 2024, 2023 and 2022 as follows.
202420232022
U.S. federal corporate statutory rate21.0 %21.0 %21.0 %
State and local taxes, less federal tax benefit1.4 1.3 2.0 
Net effects of foreign tax rate differential2.5 1.8 1.5 
Withholding tax1.3 1.5 2.1 
Repatriation cost(1.5)(2.0)(3.2)
Global Intangible Low-Tax Income (“GILTI”)0.4 0.7 0.3 
ASC 740-30 (formerly APB 23)1.5 1.7 1.9 
Valuation allowance changes0.4 1.7 0.5 
Uncertain tax positions0.9 0.9 0.2 
Equity compensation(1.3)(0.6)(0.6)
Nondeductible acquisition costs0.3 0.4 0.4 
Foreign Derived Intangible Income (“FDII”) deduction(1.1)(1.4)(1.6)
Tax credits(0.6)(0.7)(1.1)
Income not subject to tax(0.3)(1.6)(3.5)
Amortization of goodwill and other intangible assets(1.3)(0.8)— 
Interest on equity(1.8)(0.7)(0.4)
Return to provision adjustment(0.2)0.1 — 
Loss on sale1.1 — — 
Other, net0.5 — 0.7 
Effective income tax rate23.2 %23.3 %20.2 %
The principal items that gave rise to deferred income tax assets and liabilities as of December 31, 2024 and 2023 are as follows.
20242023
Deferred Tax Assets:
Reserves and accruals$83.4 $80.1 
Allowance for credit losses7.4 7.8 
Inventory reserve9.0 5.9 
Pension and postretirement benefit plans
20.0 25.3 
Tax loss carryforwards112.4 81.3 
Deferred taxes recorded in other comprehensive income1.4 13.4 
Foreign tax credit carryforwards50.7 57.9 
Other22.4 32.2 
Total deferred tax assets306.7 303.9 
Valuation allowance(125.6)(115.7)
Deferred Tax Liabilities:
LIFO inventory(20.3)(20.2)
Investment in partnership(30.2)(35.7)
Property, plant and equipment(50.0)(42.5)
Intangible assets(770.4)(635.4)
Unremitted foreign earnings(41.8)(35.5)
Total deferred tax liabilities(912.7)(769.3)
Net deferred income tax liability$(731.6)$(581.1)
The Company believes that it is more likely than not that it will realize its deferred tax assets through the reduction of future taxable income, other than for the deferred tax assets reflected below. Tax attributes and related valuation allowances as of December 31, 2024 were as follows.
Tax BenefitValuation AllowanceCarryforward Period Ends
Tax Attributes to be Carried Forward
U.S. federal net operating loss$13.3 $(0.1)2032-2038
U.S. federal capital loss0.6 (0.6)2029
U.S. federal tax credit50.8 (50.8)2025-2034
Alternative minimum tax credit0.5 (0.1)Unlimited
U.S. state and local net operating losses4.9 (2.1)2026-2041
U.S. state capital loss0.3 (0.1)2028
Non U.S. net operating losses62.6 (36.5)Unlimited
Non U.S. capital losses0.6 (0.6)Unlimited
Excess interest30.0 (29.7)Unlimited
Other deferred tax assets5.0 (5.0)Unlimited
Total tax carryforwards$168.6 $(125.6)
A reconciliation of the changes in the valuation allowance for deferred tax assets for the years ended December 31, 2024, 2023 and 2022 are as follows.
202420232022
Beginning balance$115.7 $107.3 $106.4 
Revaluation or additions due to acquisitions or mergers(1)
22.9 — — 
Charged to tax expense(10.8)6.4 3.1 
Charged to other accounts(2.2)2.0 (2.2)
Ending balance$125.6 $115.7 $107.3 
(1)Revaluation for the tax year ended December 31, 2024 relates to the inclusion of ILC Dover’s opening balance sheet beginning valuation allowance.
Total unrecognized tax benefits were $26.4 million, $19.1 million and $10.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. The net increase in this balance primarily relates to current year additions to previously established reserves. Included in total unrecognized benefits at December 31, 2024 is $26.4 million of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized. The balance of total unrecognized tax benefits is not expected to significantly increase or decrease within the next twelve months. Below is a tabular reconciliation of the changes in total unrecognized tax benefits during the years ended December 31, 2024, 2023 and 2022.
202420232022
Beginning balance$19.1 $10.8 $21.1 
Gross increases for tax positions of prior years0.8 0.4 0.4 
Gross decreases for tax positions of prior years(0.3)— (3.7)
Gross increases for tax positions of current year8.1 7.9 4.1 
Settlements— — (9.9)
Lapse of statute of limitations(0.6)(0.2)(0.1)
Changes due to currency fluctuations(0.7)0.2 (1.1)
Ending balance$26.4 $19.1 $10.8 
The Company includes interest expense and penalties related to unrecognized tax benefits as part of the provision for income taxes. The Company’s income tax liabilities at December 31, 2024 and 2023 include accrued interest and penalties of $3.2 million and $2.0 million, respectively.
The statutes of limitations for U.S. Federal tax returns are open beginning with the 2020 tax year, and state returns are open beginning with the 2014 tax year. The Company is currently under audit for the 2020 tax year. The Internal Revenue Service (“IRS”) has largely completed its examination of the 2020 tax year and no material adjustments were proposed. The Company was notified during 2024 of a new U.S. Federal income tax audit for the tax years 2021 and 2022. There are no known issues as the audit will start in 2025.
The Company is subject to income tax in 48 jurisdictions outside the U.S. The statute of limitations varies by jurisdiction with 2013 being the oldest year still open. The Company’s significant operations outside the U.S. are located in the United Kingdom, Germany, China, Ireland, Switzerland, and Singapore. In Germany, a tax audit covering tax years 2011-2014 was closed in Q4 2024. Note that any other liabilities arising from pre-merger tax years for legacy Ingersoll Rand Industrial entities would be indemnified.
The Company does not assert the ASC 740-30 (formerly APB 23) indefinite reinvestment of the Company’s historical non-U.S. earnings or future non-U.S. earnings. The Company records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. The Company’s deferred income tax liability as of December 31, 2024 was $41.8 million