"It rewards and encourages enterprise, it encourages and enables aspiration," he said. Notices will now be issued by the Australian Tax Office to thousands of businesses advising them to increases the upper threshold for the 32.5 per cent marginal tax rate from $87,000 to $90,000 from July 1. The step is the first in a sweeping overhaul of the income tax system - voted on with less than 20 minutes of debate given to Labor and the Greens in the final session - that will see seven major changes to Australia's taxation system over the next decade. Under the changes the 37 per cent tax rate will be eliminated altogether by 2028, putting 90 per cent of all taxpayers on the flat tax rate of 32.5 per cent for every dollar they earn between $40,000 and $200,000. Prime Minister Malcolm Turnbull, with Finance Minister Mathias Cormann and Treasurer Scott Morrison, speaks to the media following the passage of the tax legislation through the Senate. Credit:Alex Ellinghausen

"As workers earn more and get more opportunities, or do extra shifts, they will not be penalised for that," said Treasurer Scott Morrison. Over four years, taxpayers earning up to $125,333 a year will get a $530 bonus after filing their tax return. This offset will indefinitely increase to $645 a year from 2022, but only for taxpayers earning up to $67,000 a year. The final stage is targeted at high income earners, raising the threshold for the 45 per cent marginal tax rate from $180,001 to $200,001 from July 1 2024. Labor and the Greens argued against the package, warning it would lock future governments into unprecedented tax cuts that would not come into force until another two elections had taken place. Minister for Finance Mathias Cormann in discussion with Senator Rex Patrick in the Senate. Credit:Alex Ellinghausen

"This is one of the most shameful, disgraceful days that I have seen in my time in this Senate," said Greens leader Richard Di Natale. "One hundred and forty billion dollars ripped out of public revenue, taken out of our public hospitals, public schools and infrastructure because you want to ram this bill through without any scrutiny." Labor has pledged to repeal the cuts if it wins the next election, putting it on a collision path with workers earning more than $120,000. Opposition Leader Bill Shorten has promised to strip benefits from high-income earners to deliver more generous cuts to workers on low and middle incomes. Shadow treasurer Chris Bowen said Labor believed in responsible budgeting. “We do not believe in locking in unaffordable promises, six and seven years in advance.” One Nation and the Centre Alliance had voiced repeated concerns about the package. Just days before the package passed they joined Labor in arguing it should be split into three stages before backflipping to deliver the government the votes it needed.

One Nation leader Pauline Hanson confirmed she did not ask the government for anything in return for her support for the cuts, but said she would continue to push for the government to fund 1000 apprenticeship places. Minister for Finance Mathias Cormann walks past Senator Pauline Hanson in the Senate Credit:Alex Ellinghausen "I'm going to take credit for this as well because I was one of the senators that actually has supported this," she said. Once all components of the signature budget measure are in place, the total cost will dwarf former treasurer's Peter Costello's final tax cuts. Based on the 2007-08 budget papers, those would be worth $10.4 billion in 2018 dollars. A Parliamentary Budget Office costing of the policy revealed the cuts would surge from $360 million next year to cost more than $24 billon a year by 2028.

Government senators were muted in their celebration of the landmark bill passing, filing out quietly after Senator Cormann shook hands with crossbenchers. Prime Minister Malcolm Turnbull is expected to welcome the passing of the legislation on Thursday afternoon. The government's attention will now turn to getting the $35.6 billion remaining of its company tax cuts through Parliament in the final sitting week before it faces five byelections in July. Loading Replay Replay video Play video Play video