The federal government will slash the stage three tax cuts for those earning $200,000 from $9075 to $4529 in what Anthony Albanese has defended as a necessary backflip to help struggling households.

The changes, the full details to be approved by caucus today, include lowering the 19 per cent tax rate for incomes up to $45,000 to 16 per cent, and reinstating the 37 per cent rate for those earning between $135,000 and $190,000, after which the 45 per cent rate will apply.