The Morrison government will bring forward a $29.8 billion tax cut for millions of small employers in a dramatic move to lift investment and wages, turning attention back to the economy after a spate of spending promises from Labor.

Small companies will get their tax rate cut to 25 cents in the dollar five years earlier than previously planned under the significant new policy, which has been in planning for months and will be announced on Thursday.

Scott Morrison will outline the plan, which brings the tax cut forward by five years. Credit:AAP

The decision escalates the economic policy contest between the two major parties, with Labor already saying it would apply a higher tax rate for the same companies, a group that collectively employs up to seven million workers.

Prime Minister Scott Morrison will outline the plan with an estimate that a small company like an independent supermarket or hotel with a profit of about $500,000 would have an additional $7,500 a year, helping to lift wages or hire more staff.