Prime Minister Anthony Albanese hints 'everyone' should benefit from stage three tax cut overhaul

Prime Minister Anthony Albanese has hinted lower-income earners could benefit from an expansion of stage three tax cuts.

The tax cuts were expected to come into effect on July 1, but there will be changes to be approved by cabinet.

Albanese told KIIS FM this morning that "everyone" would get a tax cut ahead of a special cost of living caucus meeting tomorrow.

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The stage three tax cuts as currently legislated have faced criticism for benefitting higher income earners far more than those on smaller salaries and creating the potential to put upward pressure on inflation.

They would see the $120,001-$180,000 tax bracket abolished and everyone earning between $45,000 and $200,000 taxed at 30 per cent instead of between 32.5 and 45 per cent.

It would mean Australians earning $45,000 wouldn't get a tax cut, while someone taking home $200,000 would benefit to the tune of $9075.

However that could change, according to Albanese.

"Across the board, what we're doing is looking at how we can help low and middle-income earners," he said.

"Middle Australia are doing it particularly tough."

However, 9News understands the new plan to go before cabinet today would lower the top tax bracket to $180,000.

That would save $3.6 billion per year, which would then in turn be redistributed to lower-income earners, possibly through an increase to the tax-free threshold.

The change would mean people earning over $200,000 a year would receive a $6075 tax cut instead of $9075, while someone on $90,000 would get around $1400 instead of $1125.

Ultimately, all taxpayers will get a cut if cabinet rubber stamps the policy.

If approved, the new stage three cuts could be unveiled to Labor MPs in a special cost of living caucus tomorrow before the Albanese addresses the National Press Club on Thursday.