Federal budget: no tax break for low- and middle-income workers as economic outlook worsens

Treasurer Jim Chalmers says the October floods will have an impact on inflation, with fruit and vegetable prices likely to increase by 8%. Photograph: Saeed Khan/AFP/Getty Images

The Albanese government will not extend the low and middle income tax offset (LMITO), meaning workers earning less than $126,000 will not get a tax break, worth up to $1,500, beyond 2022.

The Guardian understands new Treasury forecasts for the 25 October budget also predict inflation will be higher, for longer. Inflation will peak in the December quarter, as expected, at just under 8%, but officials now expect Australia’s cost of living squeeze will be more protracted, largely because of the spike in power bills.