Tony Abbott is planning to announce a generous package of income tax cuts in the lead-up to the 2016 election in a bid to offset the pain of his austerity budget and win back disaffected voters.

But any personal savings would not show up in pay packets until after the election, unless the economy surprises everyone by wiping away a forecast $10.6 billion deficit when the election falls due in the third quarter of 2016.

"Over the next 10 years we will reduce our expected debt by nearly $300 billion,": Joe Hockey. Credit:Andrew Meares

The prospect of tax sweeteners offers a potential lifeline for marginal seat MPs in the Coalition party room, following a voter backlash to a budget which has made life harder for many households.

The move to cut income taxes a year ahead of schedule represents the second half of a staged political strategy designed to give voters a ''pay-day'' for the sacrifice of spending cuts and tax increases in education, health, petrol, and income taxes for the rich.