DOW CHEMICAL CO /DE/

NOTE 7 –INCOME TAXES

As the financial statements for Dow Inc. and TDCC are substantially similar, including the provision (credit) for income taxes, the following income tax discussion does not include reference to TDCC's provision (credit) for income taxes or its effective tax rate.

The Company's effective tax rate fluctuates based on, among other factors, where income is earned, the level of income relative to tax attributes and the level of equity earnings, since most earnings from the Company's equity method investments are taxed at the joint venture level.

The following table provides effective tax rate information for Dow Inc. for the three and nine months ended September 30, 2025 and 2024:

The credit for income taxes for the three months ended September 30, 2025 was impacted by the recording of a tax benefit stemming from the U.S. Tax Court's decision in Varian Medical Systems Inc. v. Commissioner of $100 million and a tax benefit of $20 million related to the sale of an additional portion of the Company's membership interests in Diamond Infrastructure Solutions, partially offset by losses attributable to jurisdictions for which no tax benefit can be recognized. The provision for income taxes for the nine months ended September 30, 2025 was also impacted by the initial sale of a portion of the Company's membership interests in Diamond Infrastructure Solutions resulting in a tax benefit of $89 million, which was offset by valuation allowances in certain foreign jurisdictions of $242 million. See Note 17 for additional information related to the Diamond Infrastructure Solutions transaction.

In the first nine months of 2024, the Company recorded a tax benefit of $194 million related to a reassessment of interest and penalties on a tax matter in a foreign jurisdiction, resulting in a reduced effective tax rate for the period.

On July 4, 2025, U.S. legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (“the Act”) and commonly referred to as the One Big Beautiful Bill Act was signed into law. The Act, among other things, extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime. Based on the analysis performed by the Company to date, the Act is not expected to have a material impact on the effective tax rate.