Australians are paying substantially less income tax than a decade ago, even as bracket creep gradually erodes previous cuts.

Economists at Canberra University's NATSEM unit found that households are around $31.5 billion better off since 2004-05 due to tax cuts that they would have been if tax brackets were simply indexed to inflation.

Households are about $20 billion better off than if tax brackets had been increased in line with wage growth.

The findings show that the effects of bracket creep have been more than erased by income tax cuts over the past decade.

The report also shows that bracket creep is unlikely to erode these gains over the next four years.

The Government will receive about $11 billion more in income tax revenue over the next four years than it would if tax brackets were indexed to average wage growth, and about $8.9 billion more than if they were indexed to inflation.

That means the average working age household will pay between $1,000-1,200 more per year in income tax than if indexation of tax brackets was introduced now.

However, that is less than the benefits that households have accrued from tax cuts since 2004-05.

NATSEM said that high and low income households have benefited roughly equally, relative to their income, from the past decade's worth of income tax cuts.

The report finds that the average household was around $2,200 a year better off, with the top 10 per cent of income earners getting a $4,500 benefit and the bottom decile $450 a year better off.

In percentage terms, though, the average tax rate of top income earners fell 2.9 percentage points while low income earners saw a 3.6-percentage-point tax cut.

Also in percentage terms, both high and low income households are expected to be similarly affected by bracket creep over the next four years.

However, in dollar terms, high income households will be around $2,800 ahead overall, while the bottom 10 per cent of households by income will only come out $140 better off.

The other aspect of the NATSEM - SAS report looked at how living standards shifted over the September quarter.

Living standards were fairly static over the quarter, with wages stagnating but the cost of living also staying quite subdued.

In dollar terms, New South Wales and Tasmania saw the biggest quarterly improvements in average household budgets ($138 and $34 respectively), while all other states went backwards, led by a $411 decline for the typical Western Australian household.