Income Taxes

9 Months Ended

Sep. 30, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate from continuing operations for the three months ended September 30, 2025 was an expense of 23.0%, which differs from the U.S. statutory rate of 21.0% primarily due to state income taxes, foreign income taxes, and other permanent differences, partially offset by the benefit of noncontrolling interest for which we do not provide income taxes.

The effective tax rate from continuing operations for the nine months ended September 30, 2025 was an expense of 20.4%, which differs from the U.S. statutory rate of 21.0% primarily due to the benefit of noncontrolling interest for which we do not provide income taxes and the benefit of tax credits purchased at a discount, partially offset by state income taxes, foreign income taxes, and other permanent differences.

The effective tax rates from continuing operations for the three and nine months ended September 30, 2024 were expenses of 27.7% and 25.1%, respectively, which differ from the U.S. statutory rate of 21.0% primarily due to state income taxes, foreign income taxes, non-deductible executive compensation, and return to provision adjustments, partially offset by the benefit of noncontrolling interest for which we do not provide income taxes, excess tax benefits associated with equity-based compensation, and changes in state tax laws.

Deferred income taxes related to railcars in our lease fleet were $1.2 billion and $1.1 billion as of September 30, 2025 and December 31, 2024, respectively.

The Inflation Reduction Act of 2022 allows a company to purchase transferable tax credits. During the nine months ended September 30, 2025, we purchased $40.0 million in tax credits for approximately $38.4 million in cash. These credits were used to offset the Company’s federal income tax liability for 2024, which resulted in the recognition of a tax benefit of $1.6 million for the nine months ended September 30, 2025.

On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was enacted. The Act includes multiple business tax provisions, including the reinstatement of 100% bonus depreciation and a change in the calculation of deductible interest expense. These changes were incorporated into our provision for income taxes for the three and nine months ended September 30, 2025, resulting in an increase to our deferred tax expense, offset by a corresponding decrease to our current tax expense. The Act did not have a material impact on our total income tax expense or our effective tax rates for the three and nine months ended September 30, 2025.