How Labor's stage three tax changes will affect you

But the federal government's new proposal will see anyone earning over $150,000 worse off than they would have been under the Coalition's stage three tax cuts, which were set to come into effect this July.

The Prime Minister is out selling Labor's tax change on Thursday after going back on a promise to uphold the Coalition's tax cuts, arguing his new plan will deliver a bigger cut to 11.5 million (or 84 per cent) of Australian taxpayers.

The changes will shift benefits to low- and middle-income earners, and women, with government data showing 5.8 million female taxpayers (or 90 per cent) will receive a bigger cut than than they would have under the Coalition's legislated changes.

Under the revision, a worker earning $40,000 a year will get a $654 tax cut. They would not have got one under the original plan.

Figures show that the tax cut for workers earning between $50,000 to $130,000 a year will be $804 greater than it would have, while a worker on $140,000 will benefit by $454 more.

While those earning more than $150,000 a year will still receive a tax break, it will be less than they would have seen under the original plan. The Coalition's promised $9075 cut for those on $200,000 or more will be slashed in half.

READ MORE:

In his National Press Club speech, Prime Minister Anthony Albanese tried to head off the Coalition's furore over Labor's change, arguing it was the necessary move to help Australians facing intensifying cost-of-living pressures.

"... if we were to simply proceed with the old plan - promoted before any of these challenges even existed - it would mean middle Australia missing out on the help they need and they deserve," Mr Albanese said.

"This is the right decision, not the easy decision."

Mr Albanese went on to say that Australians required a policy that "responds to the real challenges people are facing today".

"Because when I see the pressure Australians are under right now, it's crystal clear to me that every taxpayer needs and deserves a meaningful tax cut," he said.

"And that is precisely what Australians will get from our government."

The tax changes are due to come into effect on July 1.

Treasury advice, sighted by The Canberra Times, assures that Labor's plan won't add to inflation, which is projected to decline to 2.75 per cent by the 2024-25 financial year.

The new system means earnings up to $45,000 will now be taxed at 16 per cent rather than 19 per cent. The ceiling for the second tax bracket will be shifted from $120,000 to $135,000, and the tax rate will drop from 32.5 per cent to 30 per cent.

The 37 per cent tax rate, which the stage three cuts would have scrapped, will remain. It will apply to earnings of more than $135,000 to $190,000.

Under the Coalition's stage three tax cuts, everyone earning more than $45,000 to $200,000, would have been taxed at 30 per cent.

But under Labor's plans, the ceiling for the highest tax bracket, taxed at 45 per cent, will lift to $190,000, from $180,000 under the current system.