JULIA GILLARD and Tony Abbott will go head to head in a tax battle today with the Prime Minister detailing for the first time elements of the carbon tax compensation package while Mr Abbott promises across-the-board tax cuts instead.

Ms Gillard will call for a reality check on what constitutes middle-income levels as she flags aiming the bulk of compensation for a price on carbon at households earning well under $150,000.

Battle field ... Prime Minister Julia Gillard and Opposition Leader Tony Abbott in the House. Credit:Andrew Meares

She will also confirm that the compensation for low- and middle-income families will be paid as permanent tax cuts, pension increases and increases to family payments.

In a sign a deal with the Greens and independents is close, she will say the compensation will be tailored to suit family circumstances.