Stage three tax cuts: Peter Dutton signals support for Labor's changes to tax cuts

Households facing higher living costs are soon expected to receive much-needed support, with the coalition unlikely to stand in the way of reworked tax cuts.

Under the Labor government’s revised plan, most workers will get more money back at tax time.

Peter Dutton questioned the costings of Labor’s revamped income tax package but indicated the Liberal Party would back the changes.

“Australians are in need of support at the moment,” the opposition leader said on Friday.

“We do believe that there’s a black hole in the government’s costings, and we’re analysing that at the moment and we’ll make our announcement in due course.”

The opposition has spent more than a week accusing the prime minister of breaking a promise by amending the stage three tax cuts.

But Mr Dutton said the Liberal Party “has always been the party of lower taxes, and that’s going to continue”.

Under the changes, the majority of Australians will get a bigger tax return than they otherwise would have after Labor reformed the legislated package.

The relief is set to come into effect from July 1, and has been tweaked for the benefits to mainly flow to workers on middle incomes.

The tax cuts for those earning $200,000 will be slashed from $9075 to $4500.

The shadow cabinet will meet in Canberra on Monday to formalise its position, with legislation underpinning the changes expected to be introduced to parliament next week.

Treasurer Jim Chalmers urged the coalition to back the new-look tax package.

“We have found a much much better way to deliver a similar amount of tax relief with a bigger emphasis on middle Australia and it’s better for our economy,” Dr Chalmers said.

Independent MP Zali Steggall, who represents the seat of Warringah on Sydney’s northern beaches, noted that some of her wealthier constituents would be worse off under the changes.

“I’m getting lots of great feedback from the community, some people are very upset but some people are understanding the need to provide more assistance to others that are on lower incomes,” she told Sky News.

Ms Steggall said she would wait to see the legislation before making a final decision.

Labor has the numbers to get the changes through the lower house, but if the coalition decides to oppose the package, the government will need to negotiate with the Greens and Senate cross bench.