INCOME TAXES

12 Months Ended

Dec. 31, 2024

INCOME TAXES

INCOME TAXES

10. INCOME TAXES

Income Taxes: Income taxes consist of the following for the years ended December 31, 2024, 2023 and 2022:

	Years Ended December 31,
(In millions)	2024		2023		2022
Current:
Federal	$	86.8	$	44.0	$	171.5
State		12.4		9.2		18.3
Foreign		3.5		3.0		1.3
Total current tax expense		102.7		56.2		191.1
Deferred:
Federal		17.9		18.2		71.1
State		2.8		—		24.3
Foreign		(0.4)		1.5		1.9
Total deferred tax expense		20.3		19.7		97.3
Total income taxes	$	123.0	$	75.9	$	288.4

Income taxes for the years ended December 31, 2024, 2023 and 2022 vary from amounts computed by applying the statutory U.S. federal income tax rate due to the following:

	Years Ended December 31,
	2024		2023		2022
U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
State and local taxes, net of federal benefit	2.3	%	2.6	%	2.8	%
Foreign-derived intangible income (FDII)	(2.6)	%	(2.0)	%	(2.4)	%
Foreign taxes	0.3	%	0.4	%	0.1	%
Share-based payments	0.2	%	0.5	%	—	%
Return to provision true-ups	(0.7)	%	(2.8)	%	0.1	%
Other, net	—	%	0.6	%	(0.3)	%
Effective income tax rate	20.5	%	20.3	%	21.3	%

The tax effects of temporary differences that gave rise to significant positions of deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023, were as follows:

	As of December 31,
(In millions)	2024		2023
Deferred tax assets:
Operating lease liabilities	$	84.0	$	77.4
Deferred compensation		12.1		11.8
Multi-employer withdrawal liabilities		11.4		12.8
Insurance reserves		7.8		6.3
U.S. state alternative minimum tax credits		5.9		7.4
Other		15.8		12.9
Total deferred tax assets		137.0		128.6
Valuation allowance		(5.0)		(5.3)
Total deferred tax assets, net of valuation allowance		132.0		123.3
Deferred tax liabilities:
Basis differences for property and equipment		482.7		451.4
Capital Construction Fund		192.1		206.9
Operating lease right of use assets		83.8		75.8
Intangibles		40.3		42.3
Other		26.5		16.2
Total deferred tax liabilities		825.4		792.6
Deferred tax liability, net	$	693.4	$	669.3

Income Tax Receivables: The Company had income tax receivables of approximately $2.0 million and $125.2 million at December 31, 2024 and 2023, respectively. The income tax receivable for the year ended December 31, 2023 included a 2021 federal income tax refund of approximately $118.6 million. On April 19, 2024, the Company received the federal income tax refund of $118.6 million and interest of $10.2 million earned on the federal income tax refund. These income tax receivable amounts have been included in prepaid expenses and other assets in the Company’s Consolidated Balance Sheets (see Note 2).

State Income Tax Operating Losses, State Tax Credit and Valuation Allowance: The Company’s U.S. state income tax net operating losses (“NOLs”) and U.S. state tax credit carryforwards consist of the following at December 31, 2024 and 2023:

(In millions)	Expiration Date	2024		2023
U.S. state income tax NOLs (1)	Various dates beginning in 2032	$	136.5	$	152.3
U.S. state alternative minimum tax credits	No expiration date	$	5.9	$	7.3

(1) U.S. State income tax NOLs were acquired as part of the Horizon acquisition and are presented on a gross tax basis. These U.S. state income tax NOLs are excluded from the Company’s deferred tax assets and deferred tax liabilities above as the Company does not expect to benefit from any of the $136.5 million and $152.3 million balance as of December 31, 2024 and 2023, respectively.

The Company recorded a valuation allowance against its unusable portion of U.S. state income tax NOLs of $5.0 million and $5.3 million as of December 31, 2024 and 2023, respectively, as the Company believes that it is more likely than not that the benefit from these deferred assets will not be realized.

Unrecognized Tax Benefits: Total unrecognized benefits represent the amount that, if recognized, would favorably affect the Company’s income taxes and effective tax rate in future periods. The Company does not expect a material change in gross unrecognized benefits in the next twelve months. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

	Years Ended December 31,
Unrecognized Tax Benefits (in millions)	2024		2023		2022
Balance at beginning of year	$	28.4	$	25.1	$	19.2
Tax position changes in current year		(0.7)		3.6		5.8
Tax position changes in prior years		(0.1)		(0.1)		0.3
Reductions for lapse of statute of limitations		(0.9)		(0.2)		(0.2)
Balance at end of year	$	26.7	$	28.4	$	25.1

Included in the balance of unrecognized tax benefits at December 31, 2024 are potential benefits of $22.9 million that, if recognized, would affect the Company’s income taxes and effective tax rate. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income taxes. To the extent interest and penalties are not ultimately assessed with respect to the settlement of uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the Company’s income taxes. Interest and penalties accrued related to the balance of unrecognized tax benefits were $1.2 million and $1.4 million as of December 31, 2024, and $0.9 million and $1.5 million as of December 31, 2023, respectively. During the years ended December 31, 2024 and 2023, the Company recognized $0.4 million and $0.7 million, respectively, in income taxes related to interest and penalties.

The Company is no longer subject to U.S. federal income tax audits for years before 2017. The Company is routinely involved in federal, state, local income and excise tax audits, and foreign tax audits.