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Income Taxes
 9 Months Ended
Sep. 28, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

T. INCOME TAXES

The effective tax rate for the three months ended September 28, 2025, and September 29, 2024, was 15.8% and 7.8%, respectively. The increase in the effective tax rate from the three months ended September 29, 2024, to the three months ended September 28, 2025, is primarily attributable to decreases in benefits related to reserves for uncertain tax positions, tax credits and the international provision of the U.S. Tax Cuts and Jobs Act of 2017. These were partially offset by an increase in benefit from a projected shift in the geographic distribution of income.

The effective tax rate for the nine months ended September 28, 2025, and September 29, 2024, was 13.8% and 12.0%, respectively. The increase in the effective tax rate from the nine months ended September 29, 2024, to the nine months ended September 28, 2025, is primarily attributable to decreases in benefits related to reserves for uncertain tax positions and tax credits partially offset by an increase in benefit from a projected shift in the geographic distribution of income.

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 September 28, 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 September 28, 2025, and December 31, 2024, Teradyne had $6.8 million of reserves for uncertain tax positions.

As of September 28, 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 September 28, 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 nine months ended September 28, 2025, and September 29, 2024, an expense of $0.0 million and a benefit of $1.0 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, which is scheduled to expire on December 31, 2025. The tax savings due to the tax holiday for the nine months ended September 28, 2025, were $7.4 million, or $0.05 per diluted share. The tax savings due to the tax holiday for the nine months ended September 29, 2024, were $10.2 million, or $0.06 per diluted share. Teradyne is working with the Singapore Economic Development Board on a new tax holiday with substantially similar terms to the current agreement.

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.

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 September 28, 2025, the condensed consolidated financial statements were not materially impacted by the OBBBA. Teradyne continues to evaluate the provisions of the OBBBA and will incorporate any necessary adjustments as further guidance becomes available.