A personal income tax surge has underpinned a $400 billion revenue gain since Labor came to office and will shrink the forecast deficit this year, paving the way for Treasurer Jim Chalmers to talk up his economic management on the eve of an election.

Ahead of a possible budget update from Chalmers next week, economist Chris Richardson predicted the 2024-25 deficit would be $11 billion smaller than forecast in December. His new analysis came as separate research from the e61 Institute showed that over the past decade, high-income earners have suffered the most from income tax bracket creep.