S. INCOME TAXES

The effective tax rate for the three months ended June 28, 2026, and June 29, 2025, was 15.1% and 12.7%, respectively. The increase in the effective tax rate from the three months ended June 29, 2025, to the three months ended June 28, 2026, is primarily attributable to lower benefits from tax credits partially offset by increased benefits from equity compensation and a projected shift in the geographic distribution of income.

The effective tax rate for the six months ended June 28, 2026, and June 29, 2025, was 14.2% and 12.4%, respectively. The increase in the effective tax rate from the six months ended June 29, 2025, to the six months ended June 28, 2026, is primarily attributable to lower benefits from tax credits partially offset by increased benefits from equity compensation and 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 June 28, 2026, 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 28, 2026, and December 31, 2025, Teradyne had $6.9 million of reserves for uncertain tax positions.

Teradyne recognizes interest and penalties related to income tax matters in income tax expense. As of June 28, 2026, and December 31, 2025, $0.3 million and $0.3 million, respectively, of interest and penalties were accrued for uncertain tax positions. For the six months ended June 28, 2026, and June 29, 2025, an expense of less than $0.1 million and less than $0.1 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 28, 2026 and June 29, 2025, were $14.9 million, or $0.09 per diluted share, and $3.6 million, or $0.02 per diluted share, respectively. In December 2025, Teradyne entered into a new agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2025. The new tax holiday is scheduled to expire on December 31, 2035.

On January 5, 2026, the Organisation for Economic Co-operation and Development (OECD/G20) Inclusive Framework released a ‘side-by-side’ arrangement that, if adopted by foreign jurisdictions, will provide a safe harbor for U.S.-headquartered multinationals. The arrangement would effectively recognize the U.S. tax system as complying with the Pillar Two GloBE rules for fiscal years beginning on or after January 1, 2026. Under this arrangement, the Company expects its U.S.-parented group and foreign subsidiaries to be exempt from the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) in foreign jurisdictions that adopt this safe harbor. As a result, while the ‘side-by-side’ arrangement has not yet been formally adopted in any significant jurisdictions which Teradyne operates in, we do not currently expect to have a material impact from top-up taxes under the IIR and

UTPR. Teradyne continues to monitor the implementation of Qualified Domestic Minimum Top-up Taxes (QDMTTs) in foreign jurisdictions, which remain unaffected by the side-by-side arrangement.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) was enacted, introducing significant changes to U.S. federal income tax law. Key provisions include a permanent extension of 100% bonus depreciation, immediate expensing of research and experimental expenditures, and modifications to the business interest expense deduction. The OBBBA also reduces deduction rates related to foreign income and export sales income. The key provisions of the OBBBA that became effective in 2026 are not expected to have a material impact on Teradyne’s consolidated financial statements for the year ended December 31, 2026.