What was the effective tax rate for Hertz related to Dollar Rent A Car in 2023?
Dollar_Rent_A_Car Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Statutory federal tax rate | 21 % | 21 % | 21 % |
| State and local income taxes, net of federal effect | 4 | 5 | 4 |
| Change in state rates, net of federal effect | — | (4) | — |
| Foreign tax rate differential | — | 2 | — |
| Federal and foreign permanent differences | — | (5) | 1 |
| Tax credits | 1 | (70) | (1) |
| Withholding taxes | — | 1 | 1 |
| Valuation allowance | (17) | (73) | (6) |
| Change in fair value of Public Warrants & Exchangeable Notes | 2 | (14) | (7) |
| European reorganization | — | 6 | — |
| Uncertain tax positions | — | 1 | — |
| U.S. tax on foreign earnings | — | 9 | 1 |
| Nondeductible officer compensation | — | 5 | 1 |
| Other | 1 | 1 | 1 |
| Effective tax rate - Hertz Global | 12 | (115) | 16 |
| Hertz Holdings exclusive items(1) | (1) | (153) | 6 |
| Effective tax rate - Hertz | 11 % | (268) % | 22 % |
Source: Item 23 — RECEIPTS (FDD pages 102–301)
What This Means (2025 FDD)
According to Dollar Rent A Car's 2025 Franchise Disclosure Document, the effective tax rate for Hertz Global was (115)% in 2023. The effective tax rate for Hertz was (268)%. These figures reflect the overall tax situation of Hertz Global and Hertz, respectively, which are affiliated with Dollar Rent A Car, and include various factors that contribute to the final tax rate.
The reconciliation of the statutory and effective income tax rates includes items such as state and local income taxes, changes in state rates, foreign tax rate differentials, federal and foreign permanent differences, tax credits, withholding taxes, valuation allowances, changes in the fair value of Public Warrants & Exchangeable Notes, European reorganization, uncertain tax positions, U.S. tax on foreign earnings, and nondeductible officer compensation. These elements can significantly impact the overall effective tax rate, either increasing or decreasing it from the standard statutory federal tax rate of 21%.
The document also provides additional context regarding factors influencing tax provisions. For example, the change in the tax provision in 2023 compared to 2022 was driven by lower pre-tax income in 2023, benefits from EV credits generated in 2023, the release of valuation allowances in 2023 primarily related to the characterization of the loss on the restructuring of European operations, and the non-taxable change in the fair value of Public Warrants. These details help explain the complexities involved in calculating the effective tax rate for a large organization like Hertz Global and Hertz.