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Income Taxes | 6 Months Ended
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Jun. 29, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | T. INCOME TAXES The effective tax rate for the three months ended June 29, 2025, and June 30, 2024, was 12.7% and 15.1%, respectively. The decrease in the effective tax rate from the three months ended June 29, 2025, to the three months ended June 30, 2024, is primarily attributable to the benefit of a projected shift in the geographic distribution of income and increases in benefits related to tax credits and the international provision of the U.S. Tax Cuts and Jobs Act of 2017. The effective tax rate for the six months ended June 29, 2025, and June 30, 2024, was 12.4% and 14.3%, respectively. The decrease in the effective tax rate from the six months ended June 30, 2024, to the six months ended June 29, 2025, is primarily attributable to increases in benefits related to tax credits and the international provision of the U.S. Tax Cuts and Jobs Act of 2017. On a quarterly basis, Teradyne evaluates the realizability of the deferred tax assets by jurisdiction and assesses the need for a valuation allowance. As of June 29, 2025, Teradyne believes that it will ultimately realize the deferred tax assets recorded on the condensed consolidated balance sheet. However, should Teradyne believe that it is more-likely-than-not that the deferred tax assets would not be realized, the tax provision would increase in the period in which Teradyne determined that the realizability was not likely. Teradyne considers the probability of future taxable income and historical profitability, among other factors, in assessing the realizability of the deferred tax assets. As of both June 29, 2025, and December 31, 2024, Teradyne had $6.8 million of reserves for uncertain tax positions. As of June 29, 2025, Teradyne estimates that it is reasonably possible that the balance of unrecognized tax benefits may decrease approximately $0.7 million in the next twelve months because of a lapse of statutes of limitation. The estimated decrease relates to U.S. federal research and development credits. Teradyne recognizes interest and penalties related to income tax matters in income tax expense. As of June 29, 2025, and December 31, 2024, $0.3 million and $0.3 million, respectively, of interest and penalties were accrued for uncertain tax positions. For the six months ended June 29, 2025, and June 30, 2024, an expense of $0.0 million and $0.5 million, respectively, was recorded for interest and penalties related to income tax items. Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings due to the tax holiday for the six months ended June 29, 2025, were $3.6 million, or $0.02 per diluted share. The tax savings due to the tax holiday for the six months ended June 30, 2024, were $4.9 million, or $0.03 per diluted share. In November 2020, Teradyne entered into an agreement with the Singapore Economic Development Board which extended Teradyne's Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2020. The new tax holiday is scheduled to expire on December 31, 2025. The Organization for Economic Cooperation and Development (the “OECD”) has introduced a framework to implement a global minimum tax of 15% for certain multinational companies, referred to as Pillar Two. While it is uncertain whether the United States will enact legislation to adopt Pillar Two, certain countries in which Teradyne operates have enacted Pillar Two legislation, and other countries are in the process of introducing draft Pillar Two legislation. Teradyne is closely monitoring these developments and evaluating the potential future impact on its effective tax rate. As of June 29, 2025, the effective tax rate was immaterially impacted by Pillar Two in some of Teradyne's foreign jurisdictions. On July 4, 2025, H.R. 1, commonly referred to as the "One Big Beautiful Bill Act" (“OBBBA”), was signed into law, enacting significant changes to U.S. corporate tax law. As of the date of this filing, Teradyne does not expect the OBBBA to have a material impact on the condensed consolidated financial statements or the future tax positions in any tax jurisdictions where Teradyne operates. Teradyne continues to evaluate the provisions of the OBBBA and will incorporate any necessary adjustments as further guidance becomes available.

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