Relief for Increase in Carbon Tax on Farm Diesel
Revenue has released revised guidance that reflects the extension of the current carbon tax rate on farm diesel to 13 October 2026. The updated guidance also includes a new section outlining how claims should be made in Form 11 and CT1 returns.
Overview of the relief
Section 664A TCA 1997 provides an additional tax deduction for farmers in respect of increases in the carbon tax element of farm diesel costs.
The relief has applied since 1 January 2012 and is available where a person carrying on a trade of farming is entitled to deduct farm diesel expenses in calculating taxable farming profits.
Farm diesel is subject to Mineral Oil Tax, which includes a carbon tax component. Carbon tax on farm diesel was originally introduced at a rate of €41.30 per 1,000 litres on 1 May 2010. The rate has increased over time and currently stands at €172.14 per 1,000 litres for the period from 1 May 2025 to 13 October 2026.
How the relief works
Farmers may claim:
- the normal trading deduction for the full cost of farm diesel; and
- an additional deduction equal to the increase in carbon tax above the original 2010 rate.
The additional deduction is calculated as:
Revenue has confirmed that the ordinary deduction for diesel costs continues to apply, meaning the section 664A deduction is an additional relief rather than a replacement deduction.
Who can claim
The relief is available to:
- individuals carrying on a trade of farming;
- farming partnerships; and
- farming companies.
For these purposes, “farm diesel” refers to mineral oil classified as “other heavy oil” used in the farming trade but specifically excludes home heating oil.
Revenue has confirmed that agricultural contractors are not eligible for the relief because the statutory definition of “farming” requires the occupation of farmland in the State. Contractors may, however, continue to claim ordinary trading deductions for diesel costs, including carbon tax, as business expenses.
How to claim
The relief is claimed through:
- Form 11 for Income Tax purposes; or
- CT1 for Corporation Tax purposes.
Revenue states that the section 664A deduction should be included in the tax-adjusted farming profit computation and reflected in the relevant extracts sections of the return.
Practical points
Taxpayers should:
- review 2025 and 2026 farm diesel purchase records and separate purchases by applicable rate period;
- incorporate a section 664A computation into the tax-adjusted farming profit computation for the next filing cycle; and
- ensure claims are correctly reflected in Form 11 or CT1 filings.
Self-assessed individuals should note that the general pay-and-file deadline is 31 October 2026, with the ROS extended filing deadline for 2025 Form 11 returns currently set at 18 November 2026.
Companies should note that CT1 filing and payment obligations generally arise nine months after the accounting period end, with mandatory e-filing deadlines applying on the 23rd day of the ninth month.
Fuel Income Support Scheme (2026)
Separately from the tax relief under Section 664A, the Government have introduced a temporary Fuel Income Support Scheme (FISS) in 2026 to support farmers and agricultural contractors facing increased green diesel costs.
Key points:
- The scheme provides direct income support based on historic marked gas oil (green diesel) usage.
- It applies to fuel use during the period March–July 2026.
- Eligible applicants include:
- Active farmers,
- Agricultural and forestry contractors, and
- Certain fishers.
- Farmers must generally have submitted a 2025 Basic Income Support for Sustainability (BISS) application as an active farmer and continue farming in 2026.
- New entrants to farming or contracting in 2026 may also qualify, subject to certain registration and application conditions.
- The scheme is expected to pay approximately 20 cent per litre of eligible fuel usage, subject to the overall budget.
Important Deadline
Applications for the Fuel Income Support Scheme must be submitted by Wednesday, 27 May 2026.
Further details and applications are available through gov.ie – Fuel Income Support Scheme