October’s budget is expected to include some measures to reduce the income tax burden on earners, with a widening of tax bands the most likely route to be announced by Government.

That, should it happen, will go some way towards reducing income tax burdens in 2027.

However, rather than relying on changes from Government for management of tax liabilities, farmers and businesses need to continually seek to be as tax efficient as possible. Being tax-efficient is about keeping as much hard-earned income as possible and using earnings from the farm business to reinvest in the future of both the business and the owner.

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How best to do that

As outlined on page 50, the single best way to be both tax-efficient and to build savings for the future is to contribute as much as you can – within the allowed limits – to your pension.

If the farm business has a strong year, then it makes sense to maximise pension payments. If your income is pushed into the higher-rate tax bracket during a good year, then pension contributions can significantly reduce your tax bill.

Once your pension is sorted, there are some other tax house-keeping duties that should be attended to each year – understand tax credits and ensuring full use is being made of all the available allowances. Remember, a subscription to the Irish Farmers Journal is tax-deductible for farmers. While there are not many personal allowances that can be claimed for pay-as-you-earn (PAYE) workers, remember to keep any receipts for medical expenses incurred during the year; there is a 20% rebate available from Revenue on those. For nursing home expenses that rises to 40%.

Make sure that allowances are maximised for married couples or couples in a civil partnership. Keep on top of specific farm reliefs, such as stock relief, accelerated capital allowances, changes to VAT refunds and capital gains tax relief. October’s budget may well see some changes to these allowances for 2027.

For farmers, certain income streams can be tax-free. Earnings from qualifying leases are not subject to income tax. There are caps to the tax-free income which can be claimed, ranging from €18,000 for a five-year lease to €40,000 for a 15-year lease. It is worth noting that leases for solar installations are not covered by this tax-free allowance. The annual payments for forestry plantations are exempt from income tax, as is income from the occupation of woodlands. Income from forestry is subject to PRSI and USC.

A different outlook

While tax efficiency is about paying as little tax as possible, it can more correctly be described as minimising tax payments while maintaining a desired standard of living and making arrangements for the future. For example, if a farmer on the higher rate of tax decides to spend €1,000 on a deductible item for the business, they will save several hundred euro on their tax bill. They will, however, also have several hundred euro less for their other spending needs. For farmers on the lower rate of tax, the salesman’s pitch that a purchase “can be written off against tax” should carry even less weight.

Every potential investment in the farm business should be made on its own merits and be backed by a solid business plan. The tax implications of spending should form part of the decision when calculating whether to make an investment or not, rather than have the potential tax saving lead the decision. Efficient tax planning is also critical from a cashflow perspective. In farming, with its hugely volatile incomes from year to year, tax bills for a good year can arrive during a year when incomes are tight. We saw this in the dairy sector, that has seen particularly volatile returns since 2022, and are seeing larger than usual tax bills for the beef sector on the back of unusually high returns in 2025.

As usual with any aspect of financial planning, getting the right advice is critical. Talk to an accountant or financial adviser who can help when making decisions which will have tax implications. If nothing else, their bill should be tax deductible.