INCOME TAXES

9 Months Ended

Jul. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

5.    INCOME TAXES

The following table provides income tax details:

	Three Months Ended						Nine Months Ended
	July 31,						July 31,
	2025			2024			2025			2024
	(in millions, except percentages)
Income before taxes	$	241		$	213		$	760		$	617
Provision (benefit) for income taxes	$	50		$	(176)		$	143		$	(70)
Effective tax rate	20.8		%	(81.9		%)	18.8		%	(11.2		%)

The effective tax rate for the three and nine months ended July 31, 2025 was lower than the U.S. statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, partially offset by U.S. taxes on those earnings and the impact of Pillar Two minimum taxes.

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the U.S. The OBBBA includes numerous provisions that affect corporate taxation, including changes to bonus depreciation, the expensing of domestic research costs, and modifications to certain U.S. international tax rules. The company has analyzed the impacts of the OBBBA and reflected them in the current period. These impacts do not have a material effect on the tax rate for the three and nine months ended July 31, 2025. The majority of the tax law changes will take effect in future years.

The Organization for Economic Cooperation and Development (“OECD”) reached agreement among certain member countries to implement a global minimum tax framework, commonly referred to as Pillar Two, which established a minimum 15 percent income tax rate. Various countries have passed legislation to comply with the Pillar Two model rules. A subset of these rules became effective for Keysight in the current fiscal year. While we expect to meet transitional safe harbor requirements in most jurisdictions, there are a limited number of jurisdictions where we expect Pillar Two taxes to apply. The income tax provision for the three and nine months ended July 31, 2025 included the effects of Pillar Two taxes.

The income tax expense for the three and nine months ended July 31, 2025 was higher compared to the same periods last year primarily due to the inclusion of one-time discrete tax benefits from U.S. amended tax return filings in relation to the Global Intangible Low-Taxed Income (“GILTI”) tax regulations and the settlement of a Malaysia uncertain tax position in the three and nine months ended July 31, 2024. The income tax expense for the three and nine months ended July 31, 2025 included a net discrete expense of $1 million and $11 million, respectively. The income tax benefit for the three and nine months ended July 31, 2024 included a net discrete benefit of $179 million and $178 million, respectively. The discrete tax expense for the three and nine months ended July 31, 2025 was higher compared to the same periods last year primarily due to one-time discrete tax benefits from U.S. amended tax return filings in relation to the GILTI tax regulations and the settlement of a Malaysia uncertain tax position in the three and nine months ended July 31, 2024.

On June 14, 2019, the U.S. Department of the Treasury (“Treasury”) issued final regulations relating to GILTI under IRC § 951A (the “tax regulations”). The tax regulations contained language that disallowed GILTI tax deductions for intangible asset amortization resulting from the Singapore restructuring completed in 2018. In the third quarter of 2024, we concluded that

Treasury exceeded its regulatory authority and the intangible asset amortization should be deductible. We amended our U.S. federal income tax returns for the open tax years to claim the deduction and filed a lawsuit seeking a tax refund. See Note 13, “Commitments and Contingencies,” for additional information. The Singapore intangible assets will continue to be amortized for GILTI tax purposes until 2033. If we are ultimately unsuccessful in defending our refund claim, we will be required to reverse the benefit previously recorded, which would most likely result in a material increase in the effective tax rate and our income tax liability.

Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment in those jurisdictions. The Malaysia tax incentive expires October 31, 2025. The Singapore tax incentive expires July 31, 2029. The impact of the tax incentives decreased income taxes by $49 million for the nine months ended July 31, 2025.

The open tax years for the U.S. federal income tax return and most state income tax returns are from November 1, 2019 through the current tax year. Keysight’s U.S. federal income tax returns for 2020, 2021 and 2022 are currently under audit by the Internal Revenue Service (“IRS”). For the majority of our non-U.S. entities, the open tax years are from November 1, 2019 through the current tax year.

At this time, management does not believe that the outcome of any future or currently ongoing examination will have a material impact on our consolidated financial statements. We believe that we have adequate provisions for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. Given the numerous tax years and matters that remain subject to examination in various tax jurisdictions, the ultimate resolution of current and future tax examinations could be inconsistent with management’s current expectations. If that were to occur, it could have an impact on our effective tax rate in the period in which such examinations are resolved.