The Stormont House Agreement will see legislation to devolve corporation tax powers to Northern Ireland introduced at Westminster in January.
It represents another step in what has been a long campaign to reduce the tax in Northern Ireland to 12.5% to stimulate economic growth and potentially create thousands of jobs.
However, the executive will only be able to introduce a lower rate from April 2017 if it has demonstrated its finances are on "a sustainable footing for the long term".
London has also built in another condition.
It says the passage of legislation in the House of Commons must be matched by progress on welfare reform by February.
2017 has always been the Stormont executive's likely target for implementation.
The devolution of the tax-setting power must first pass Westminster before the assembly settles on a rate and decides how to pay for it.
Because of EU rules, the annual block grant will be reduced by the equivalent tax break - estimates put this at around £300m.
Finance Minister Simon Hamilton said: "After years of striving towards this goal (corporation tax) the government has agreed to advance the necessary legislation."
He said the power will "assist greatly" the rebalancing of the Northern Ireland economy.