Chancellor Rishi Sunak has cut the basic rate of income tax from 20p to 19p - meaning everyone will take home more of their salary.
Mr Sunak said the cut would come into force before the end of this Parliament - in 2024.
It came after Mr Sunak also increased the minimum base at which people pay National Insurance to £12,570 - a £3,000 increase.
Both moves will mean an increase in take-home pay for everyone.
In the same statement Mr Sunak announced 5p off petrol and diesel fuel duty and announced another £500,000 being given to local authorities to had out to households in need.
And in VAT on home upgrades such as solar panels and heat pumps will be cut to zero.
Mr Sunak also announced a widespread review of taxes.
He told MPs: “A clear goal for Conservative chancellors, and even some Labour ones, has been to cut income tax. The fact this has only happened twice in 20 years tells you how hard it is to do.
“Covid and the war in Ukraine have only added to the difficulty of achieving this by the end of this Parliament.”
Mr Sunak added: “It would clearly be irresponsible to meet this ambition this year – and yet I refuse to let that ambition wither and drift. By 2024, the OBR currently expects inflation to be back under control, debt falling sustainably, and the economy growing. Our fiscal rules are met with a clear safety margin.
“So, my final announcement today is this: I can confirm, before the end of this Parliament, in 2024, for the first time in 16 years, the basic rate of income tax will be cut from 20 to 19p in the pound.
“A tax cut for workers, for pensioners, for savers. A £5 billion tax cut for 30 million people. It is fully costed and fully paid for in the plan announced today.”
Rishi Sunak ended by telling MPs: “My tax plan delivers the biggest net cut to personal taxes in over a quarter of a century.”
