GATX CORPGATX
GATX CORP Income Taxes Disclosure
Income Taxes
The following table shows the components of income before income taxes, excluding affiliates, for the years ended December 31 (in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
| Income before Income Taxes | |||||||||||||||||
| Domestic | $ | 58.9 | $ | 80.6 | $ | 82.9 | |||||||||||
| Foreign | 220.2 | 180.8 | 162.6 | ||||||||||||||
| Total | $ | 279.1 | $ | 261.4 | $ | 245.5 | |||||||||||
The following table shows income taxes, excluding domestic and foreign affiliates, for the years ended December 31 (in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
| Income Tax Expense | |||||||||||||||||
Current | |||||||||||||||||
Domestic: | |||||||||||||||||
Federal | $ | (1.9) | $ | — | $ | 2.9 | |||||||||||
State and local | 0.1 | 0.7 | 0.2 | ||||||||||||||
| $ | (1.8) | $ | 0.7 | $ | 3.1 | ||||||||||||
Foreign | 11.7 | 13.5 | 17.3 | ||||||||||||||
Total current | $ | 9.9 | $ | 14.2 | $ | 20.4 | |||||||||||
Deferred | |||||||||||||||||
Domestic: | |||||||||||||||||
Federal | $ | 16.2 | $ | 18.4 | $ | 13.5 | |||||||||||
State and local | 5.9 | (6.4) | (1.8) | ||||||||||||||
| $ | 22.1 | $ | 12.0 | $ | 11.7 | ||||||||||||
Foreign | 31.1 | 33.8 | 26.6 | ||||||||||||||
Total deferred | $ | 53.2 | $ | 45.8 | $ | 38.3 | |||||||||||
Income taxes | $ | 63.1 | $ | 60.0 | $ | 58.7 | |||||||||||
The following table is a reconciliation between the federal statutory income tax rate and our effective income tax rate for the years ended December 31 (in millions):
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
Income taxes at federal statutory rate | $ | 58.6 | 21.0 | % | $ | 54.9 | 21.0 | % | $ | 51.6 | 21.0 | % | ||||||||||||||
Adjust for effect of: | ||||||||||||||||||||||||||
| Foreign tax effects: | ||||||||||||||||||||||||||
| Germany | ||||||||||||||||||||||||||
| Foreign tax rate change impact | (13.3) | (4.8) | % | — | — | % | — | — | % | |||||||||||||||||
| Other | 3.7 | 1.3 | % | 4.2 | 1.6 | % | 4.0 | 1.6 | % | |||||||||||||||||
| Other foreign jurisdictions | 6.6 | 2.4 | % | 5.1 | 2.0 | % | 5.6 | 2.3 | % | |||||||||||||||||
| Foreign tax effects | (3.0) | (1.1) | % | 9.3 | 3.6 | % | 9.6 | 3.9 | % | |||||||||||||||||
| Nontaxable or nondeductible items: | ||||||||||||||||||||||||||
| Nondeductible officers compensation | 4.3 | 1.5 | % | 2.8 | 1.1 | % | 2.3 | 0.9 | % | |||||||||||||||||
| Share-based compensation | (3.2) | (1.1) | % | (2.2) | (0.8) | % | (1.7) | (0.7) | % | |||||||||||||||||
| Other | 0.7 | 0.2 | % | — | — | % | (1.7) | (0.7) | % | |||||||||||||||||
| State and local income tax, net of federal (national) income tax effect (1) | 6.0 | 2.2 | % | (4.8) | (1.9) | % | (1.6) | (0.6) | % | |||||||||||||||||
| Changes in unrecognized tax benefits | (0.3) | (0.1) | % | — | — | % | 0.2 | 0.1 | % | |||||||||||||||||
Income taxes at effective income tax rate | $ | 63.1 | 22.6 | % | $ | 60.0 | 23.0 | % | $ | 58.7 | 23.9 | % | ||||||||||||||
_______
(1) During the year ended 2025, the following states represent the majority of income tax reconciling items: Illinois, California, Texas, Georgia, Kansas and Minnesota. In 2024, the states included Illinois, California, Georgia, Texas, Iowa and Kansas. In 2023, the states included Illinois, Texas, California, Georgia, Iowa and Louisiana.
In 2025, our effective tax rate was 22.6% compared to 23.0% in 2024 and 23.9% in 2023.
The adjustment for foreign earnings in each year reflected the impact of applicable statutory tax rates on income earned at our foreign subsidiaries. Compensation is adjusted for the difference between the deductibility of these expenses under the U.S. tax law versus U.S. GAAP. State income taxes are recognized on domestic pretax income or loss. The amount of our domestic income subject to state taxes relative to our total worldwide income impacts the effect state income tax has on our overall income tax rate.
Annually, we determine whether it is more likely than not that we will be able to utilize our state net operating losses, based upon that analysis, we have made the following changes to our state valuation allowance; an expense of $6.4 million, a benefit of $1.8 million, and a benefit of $2.3 million respectively in 2025, 2024, and 2023.
Separately, our affiliates incurred income taxes of $39.7 million, $25.5 million, and $25.7 million respectively in 2025, 2024, and 2023.
The following table shows income taxes paid, for the years ended December 31 (in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
| Income Taxes Paid | |||||||||||||||||
| Domestic: | |||||||||||||||||
| Federal | $ | (1.9) | $ | — | $ | 2.9 | |||||||||||
| State (1) | 0.1 | 0.7 | 0.2 | ||||||||||||||
| $ | (1.8) | $ | 0.7 | $ | 3.1 | ||||||||||||
| Foreign: | |||||||||||||||||
| Germany | $ | 6.9 | $ | 8.8 | $ | 6.0 | |||||||||||
| Canada | 0.3 | (1.2) | (0.6) | ||||||||||||||
| Poland | 5.3 | 6.8 | 4.0 | ||||||||||||||
| Mexico | 1.5 | 1.4 | 1.2 | ||||||||||||||
| Austria | (0.2) | 2.3 | 1.6 | ||||||||||||||
| Netherlands | 1.2 | 1.5 | 1.1 | ||||||||||||||
| India | 1.1 | 1.8 | 0.3 | ||||||||||||||
| Other | 0.2 | 0.9 | 0.6 | ||||||||||||||
| $ | 16.3 | $ | 22.3 | $ | 14.2 | ||||||||||||
| Total | $ | 14.5 | $ | 23.0 | $ | 17.3 | |||||||||||
_______
(1) During the years ended December 31, 2025, 2024 and 2023, we did not make tax payments to any states that exceeded more than 5% of total tax payments.
The following table shows the significant components of our deferred tax liabilities and assets as of December 31 (in millions):
| 2025 | 2024 | ||||||||||
| Deferred Tax Liabilities | |||||||||||
| Book/tax basis difference due to depreciation | $ | 1,439.4 | $ | 1,327.9 | |||||||
| Right-of-use assets | 33.7 | 41.3 | |||||||||
| Investments in affiliated companies | 3.8 | 4.5 | |||||||||
| Lease accounting | 17.4 | 18.0 | |||||||||
| Intangible amortization | 1.7 | 1.5 | |||||||||
| Other | 5.3 | 4.9 | |||||||||
| Total deferred tax liabilities | $ | 1,501.3 | $ | 1,398.1 | |||||||
| Deferred Tax Assets | |||||||||||
| Lease liability | $ | 37.9 | $ | 44.4 | |||||||
| Federal net operating loss | 140.8 | 82.6 | |||||||||
| Foreign tax credit | 0.8 | 0.8 | |||||||||
| Valuation allowance on foreign tax credit | (0.8) | (0.8) | |||||||||
| Federal interest limitation carryforward | 50.5 | 72.5 | |||||||||
| State net operating loss | 43.3 | 37.4 | |||||||||
| Valuation allowance on state net operating loss | (26.9) | (20.4) | |||||||||
| State interest limitation carryforward | 7.7 | 11.4 | |||||||||
| Foreign net operating loss | 2.1 | 4.4 | |||||||||
| Accruals not currently deductible for tax purposes | 37.8 | 32.3 | |||||||||
| Allowance for losses | 1.2 | 1.3 | |||||||||
| Pension and post-retirement benefits | 1.9 | 2.1 | |||||||||
| Other | 9.3 | 2.8 | |||||||||
| Total deferred tax assets | $ | 305.6 | $ | 270.8 | |||||||
| Net deferred tax liabilities | $ | 1,195.7 | $ | 1,127.3 | |||||||
Deferred income taxes are the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We expect at this time to continue reinvestment of foreign earnings outside the U.S. indefinitely. Consequently, our tax provision does not include any deferred tax costs that might arise due to book versus tax basis differences in investments in foreign subsidiaries. Under provisions of the territorial tax system, future dividend distributions from foreign subsidiaries and affiliates are generally exempt from U.S. income tax. Taxes may arise from withholding taxes or on foreign exchange or other gains recognized in connection with the basis differences in our investments in foreign subsidiaries. The ultimate tax cost of repatriating these earnings depends on tax laws in effect and other circumstances at the time of distribution.
At December 31, 2025, we had a U.S. federal tax net operating loss carryforward of $670.2 million that can be carried forward indefinitely until the loss is fully recovered. The utilization of net operating losses carried forward are limited to 80% of future taxable income. We also had foreign tax credits of $0.8 million that expire after 2027. We have recorded a $0.8 million valuation allowance related to these credits, as we believe it is more likely than not that we will be unable to utilize them.
At December 31, 2025, due to a provision of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), the deductibility of interest expense may be limited on our federal tax return. Disallowed amounts can be carried forward indefinitely until the expense is fully utilized. As a result of this limitation, we have a federal interest expense carryforward amount of $248.3 million.
At December 31, 2025, we had state tax net operating losses of $43.3 million, net of federal benefits that are scheduled to expire at various times beginning in 2026. We have recorded a $26.9 million valuation allowance related to state net operating losses, as we believe it is more likely than not that we will be unable to use all of these losses. Also, as a result of the provision in the Tax Act limiting the deductibility of interest expense on our federal tax return, as referenced above, we had a corresponding state interest limitation of $7.7 million that can be carried forward indefinitely until the expense is fully utilized.
At December 31, 2025, we had foreign net operating losses of $2.1 million, with various carryforward periods. It is more likely than not that we will be able to use these losses in the future, and therefore, no valuation allowance is required at this time.
At December 31, 2025, our gross liability for unrecognized tax benefits was $9.1 million. Of this amount, $9.0 million is attributed to our foreign operations. We recognize interest and penalties related to unrecognized tax benefits as income tax expense. To the extent interest is not assessed or is otherwise reduced with respect to uncertain tax positions, we will record any required adjustment as a reduction of income tax expense.
We file one separate federal income tax return and one consolidated federal income tax return with our domestic subsidiaries in the U.S. jurisdiction, as well as tax returns in various state and foreign jurisdictions. As of December 31, 2025, all audits or statutes of limitations with respect to our federal tax returns for years prior to 2022 have been closed or expired. Additionally, we currently have no open federal income tax audits, no open state income tax audits, and four of our foreign jurisdictions have open income tax audits.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 24, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.