UNITED RENTALS, INC.URI
UNITED RENTALS, INC. Income Taxes Disclosure
Income Taxes
_________________
Income before provision for income taxes for each of the three years in the period ended December 31, 2025 was as follows:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. | $ | 3,135 | $ | 3,156 | $ | 2,926 | |||||||||||
| Foreign | 203 | 232 | 285 | ||||||||||||||
| Total | $ | 3,338 | $ | 3,388 | $ | 3,211 | |||||||||||
The components of the provision (benefit) for income taxes for each of the three years in the period ended December 31, 2025 were as follows:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| U.S. federal | $ | 267 | $ | 628 | $ | 561 | |||||||||||
| U.S. state and local | 106 | 140 | 125 | ||||||||||||||
| Foreign | 66 | 64 | 66 | ||||||||||||||
| Total current | 439 | 832 | 752 | ||||||||||||||
| Deferred | |||||||||||||||||
| U.S. federal | 363 | (8) | 5 | ||||||||||||||
| U.S. state and local | 39 | (10) | 17 | ||||||||||||||
| Foreign | 3 | (1) | 13 | ||||||||||||||
| Total deferred | 405 | (19) | 35 | ||||||||||||||
| Total (current and deferred) | |||||||||||||||||
| U.S. federal | 630 | 620 | 566 | ||||||||||||||
| U.S. state and local | 145 | 130 | 142 | ||||||||||||||
| Foreign | 69 | 63 | 79 | ||||||||||||||
| Total | $ | 844 | $ | 813 | $ | 787 | |||||||||||
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 for income taxes for each of the three years in the period ended
December 31, 2025 is as follows:
| Year ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| Computed tax at statutory tax rate | $ | 701 | 21.0 | % | $ | 712 | 21.0 | % | $ | 674 | 21.0 | % | |||||||||||||||||||||||
| State and local income taxes, net of federal tax benefit (1) (2) | 124 | 3.7 | % | 93 | 2.7 | % | 116 | 3.6 | % | ||||||||||||||||||||||||||
| Foreign tax effects | 27 | 0.8 | % | 14 | 0.4 | % | 19 | 0.6 | % | ||||||||||||||||||||||||||
| Effect of cross-border tax laws | 3 | 0.1 | % | (3) | (0.1) | % | (3) | (0.1) | % | ||||||||||||||||||||||||||
| Tax credits | (18) | (0.5) | % | (4) | (0.1) | % | (3) | (0.1) | % | ||||||||||||||||||||||||||
| Changes in valuation allowance | — | — | % | — | — | % | (15) | (0.5) | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | 8 | 0.2 | % | (5) | (0.1) | % | — | — | % | ||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | (1) | — | % | 6 | 0.2 | % | (1) | — | % | ||||||||||||||||||||||||||
| Total | $ | 844 | 25.3 | % | $ | 813 | 24.0 | % | $ | 787 | 24.5 | % | |||||||||||||||||||||||
_________________
(1) The states that, in the aggregate, accounted for over 50 percent of the effect of the state and local income taxes shown above were: (i) for 2025, Alabama, California, Florida, Georgia, New Jersey, New York, Pennsylvania and Texas, (ii) for 2024, California, Florida, Georgia, New Jersey and New York, and (iii) for 2023, California, Florida, Georgia, New Jersey, New York and Pennsylvania.
(2) The lower percent for 2024 primarily reflects a benefit recognized in 2024 associated with decreases to the average state tax rates. The year-over-year increase in the percent for 2025 primarily reflects the lack of a similar benefit in 2025.
The components of deferred income tax assets (liabilities) were as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Reserves and allowances | $ | 209 | $ | 209 | |||||||
| Debt cancellation and other | 19 | 16 | |||||||||
| Net operating loss and credit carryforwards | 85 | 71 | |||||||||
| Operating lease assets | 366 | 343 | |||||||||
| Total deferred tax assets | 679 | 639 | |||||||||
| Less: valuation allowance | (4) | (5) | |||||||||
| Total net deferred tax assets | 675 | 634 | |||||||||
| Property and equipment, including rental equipment | (3,297) | (2,893) | |||||||||
| Operating lease liabilities | (366) | (343) | |||||||||
| Intangibles | (127) | (81) | |||||||||
| Interest carryforward | — | (2) | |||||||||
| Total deferred tax liability | (3,790) | (3,319) | |||||||||
| Total net deferred tax liability | $ | (3,115) | $ | (2,685) | |||||||
The following table summarizes the activity related to unrecognized tax benefits, some of which would impact our effective tax rate if recognized:
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at January 1 | $ | 35 | $ | 26 | $ | 16 | |||||||||||
| Additions for tax positions related to the current year | 2 | 2 | 3 | ||||||||||||||
| Additions for tax positions of prior years | 5 | 9 | 8 | ||||||||||||||
| Reductions for tax positions of prior years | (9) | — | — | ||||||||||||||
| Lapse of statute of limitations | (3) | (1) | — | ||||||||||||||
| Settlements | (2) | (1) | (1) | ||||||||||||||
| Balance at December 31 | $ | 28 | $ | 35 | $ | 26 | |||||||||||
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, 2025, 2024 and 2023. We believe that it is reasonably possible that a decrease of up to $6 in federal and state unrecognized tax benefits may be necessary within the next year, as a result of settlements.
On July 4, 2025, new federal tax legislation (“H.R.1”) was enacted. The relevant effects of this legislation include making 100 percent bonus depreciation permanent, the permanent restoration of the ability of taxpayers to immediately expense certain domestic research and experimental expenditures, and the restoration of EBITDA-based interest deduction limitations. In addition, H.R.1 includes international tax provisions, including eliminating the net deemed tangible income return, decreasing the tax rates and taxable income computations applicable to global intangible low-taxed income (“GILTI”) and foreign derived intangible income (“FDII”), and permanently increasing the base erosion and anti-abuse minimum tax (“BEAT”) rate. Upon enactment in the third quarter of 2025, the legislation (i) did not materially impact our effective tax rate, (ii) decreased our cash income tax liability and (iii) increased our deferred tax liability. We continue to evaluate the provisions of the legislation and its potential effects on our financial position, results of operations, and cash flows, and disclosures addressing any material financial statement impact will be provided in future periods as the impact of the legislation is determined.
The following table summarizes income taxes paid (net of refunds received). All jurisdictions in which income taxes paid (net of refunds received) were equal to or greater than five percent of total income taxes paid are included below (if the noted jurisdiction did not meet the five percent threshold for a particular year, the amount for that year is not included below).
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. federal | $ | 392 | $ | 771 | $ | 248 | |||||||||||
| U.S. state: | |||||||||||||||||
| California | 26 | ||||||||||||||||
| All states representing less than five percent of total | 136 | 139 | 108 | ||||||||||||||
| Total U.S. states | 136 | 139 | 134 | ||||||||||||||
| Foreign: | |||||||||||||||||
| Canada | 59 | 71 | 97 | ||||||||||||||
| All foreign jurisdictions representing less than five percent of total | 15 | 13 | 14 | ||||||||||||||
| Total foreign | 74 | 84 | 111 | ||||||||||||||
| Total income taxes paid (1) | $ | 602 | $ | 994 | $ | 493 | |||||||||||
(1) Cash taxes paid in 2025 decreased from 2024 primarily due to the impact of H.R.1, which is discussed above. Cash taxes paid in 2024 increased from 2023 primarily due to a reduction in the bonus depreciation percent from 80 percent to 60 percent, increased revenue year-over-year, estimated tax overpayments from 2022 that were utilized in 2023, the deferral of a portion of 2023 federal estimated payments into 2024, and normal variability in tax attributes.
We file income tax returns in the U.S., Canada, Europe, Australia and New Zealand. 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.
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. In the fourth quarter of 2025, in connection with a restructuring of our international holdings, we identified $324 of distributable foreign earnings that we have determined should no longer be considered indefinitely reinvested. We expect to remit the cash that is no longer
considered indefinitely reinvested in 2026, and, in the fourth quarter of 2025, we recorded immaterial taxes associated with the planned repatriation.
We continue to expect that our undistributed foreign earnings, excluding the distributable foreign earnings described above, 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, 2025, unremitted earnings of foreign subsidiaries were $1.621 billion. Determination of the amount of unrecognized deferred tax liability on these unremitted earnings is not practicable.
We have net operating loss carryforwards (“NOLs”) of $15 for federal income tax purposes, $16 of NOLs for foreign income tax purposes (the majority of which has an indefinite life) and $224 of NOLs for state income tax purposes that expire from 2026 through 2034.
The European Union (“EU”) member states have 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 16 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. We are also monitoring ongoing international tax discussions, including recent G-7 statements regarding a “side-by-side” system, but no changes associated with such discussions have been enacted as of the date of this report.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jan 28, 2026 | Showing above |
| 2024 | Jan 29, 2025 | |
| 2023 | Jan 24, 2024 | |
| 2022 | Jan 25, 2023 | |
| 2021 | Jan 26, 2022 | |
| 2020 | Jan 27, 2021 | |
| 2019 | Jan 29, 2020 | |
| 2018 | Jan 23, 2019 | |
| 2017 | Jan 24, 2018 | |
| 2016 | Jan 25, 2017 | |
| 2015 | Jan 27, 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.