The return of parliament has been dominated by one key issue – tax cuts – with Labor and the Coalition at odds over the government’s $158bn tax cut package.

Even before Jacqui Lambie indicated she would give her crucial support to the tax package on Thursday morning, taxpayers earning up to $126,000 were in line for a bonus when they lodge their tax returns for the 2018-19 financial year, anytime from this week.

But the amount will change once the government’s tax plan passes through the Senate.

The government is trying to legislate the 10-year plan that it announced in the April budget, which builds on tax cuts that were already legislated in the last parliament.

Already locked in and due to flow from 1 July this year is a lump-sum payment of up to $530 – called an “offset” for low- and middle-income earners – which applies to the 2018-19 financial year.

This payment, which will flow to more than 10 million Australians, is supported by Labor, has passed parliament, and will be paid for each of the next three years (until the 2021-22 financial year).

Those earning up to $37,000 will receive a payment of up to $200, those earning between $37,000 and $47,999 will get between $200 and $530, while those earning between $48,000 and $90,000 will get the full benefit of $530. The payment then gradually reduces down to $1 for those earning up to $125,333.

In the April budget the government proposed increasing this offset payment to $1,080, which would see the payment range from $255 for those earning less than $37,000 to $1,080 for those earning between $48,000 and $90,000. It will likewise gradually reduce to zero for those earning $126,000.

If the legislation passes this week, then 4.5 million Australians will get the full payment of $1,080. Treasurer Josh Frydenberg says the Australian Taxation Office has already changed its systems in preparation for payments flowing from next week.

Does the plan have bipartisan support?

The two parties’ position on the tax package diverges with stage two and three.

Stage two, which is due to come into effect in 2022-23, is aimed at addressing bracket creep.

The part which has already been legislated increases the low-income tax offset from $445 to $645 and lifts the top threshold for the 19% tax rate from $37,000 to $41,000.

It also lifts the top threshold for the 32.5% tax rate from $90,000 to $120,000.

Labor has called on the government to bring forward the change to the 32.5% tax threshold to this year, saying it will give “more tax cuts sooner” than the government is offering.

In this year’s budget, the government outlined further changes to stage two, increasing the top threshold for the 19% tax bracket to $45,000 and increasing the low-income tax offset to $700.

Prior to the election, Labor opposed stage two, but has now agreed to support these changes.

The stumbling block for getting stage one and stage two passed is the controversial stage three of the government’s tax plan which is not due to come into effect until July 2024.

Already legislated is the government’s 2018-19 budget pledge to get rid of the 37% tax bracket, putting in place a 32.5% tax rate for everyone earning between $41,000 and $200,000. This also lifted the threshold for the top tax rate of 45% from $180,000 to $200,000.

Labor had pledged to repeal this had they won the election.

In this year’s budget, the government went further, pledging to reduce the tax rate for those earning between $45,000 and $200,000 from 32.5% to 30%.

Labor remains opposed to this stage. It is concerned that about a third of the $95bn cost of the third stage will flow to those earning more than $180,000. It has also raised concerns about locking in expensive tax cuts in a softening economy.

But it has not yet decided how it will vote when the full tax package comes to the Senate for a vote on Thursday.

Regardless, the government secured the crossbench support it needs to pass its full package on Thursday morning. Lambie confirmed she has agreed to back the plan, after demanding Tasmania’s $157m public housing debt be wiped.

Centre Alliance – which carries two votes – has also confirmed it will back the full tax package. Former Liberal senator Cory Bernardi had always backed the full package.

This means the government, which needed the support of at least four crossbenchers to get legislation through the upper house, is in the box seat to see it passed.