Chancellor Gordon Brown rejected income tax cuts today in favour of #1 billion in targeted help for families.
The personal income tax allowance will rise in line with inflation but no further next month, from #4,745 to #4,895.
Using the #1 billion, the Chancellor told MPs, he could have raised that further, cutting people's tax bills.
However, that would have handed just 80p a week, or #40 a year, to an average family with annual earnings of #23,400.
Directing the cash into the child tax credit instead would give the same family #5 a week, or #260 a year.
"So the best way to do most to help low and middle-income families is not through a further rise in personal tax allowances but through tax credits which offer the best family tax cut," he told the Commons.
The child tax credit will rise by 13% over the next three years in line with earnings.
Including child benefit, that will mean up to #63 a week for the first child and #111 for two children.
As a result, the point at which families start contributing more to the Treasury (excluding National Insurance) than they receive has risen from #15,000 in 1997 to #21,200.
From April that will rise again to #22,000, with tax credits effectively wiping out income tax liability until earnings of #430 a week.
"Because of rising child tax credits, a total of three million of Britain's seven million families with children will now receive more in tax credits and child benefit than they pay in income tax," Mr Brown said.
"Again a family tax cut that does most to help low and middle-income Britain.
"And, with child benefit up from #11 in 1997 to #17 this April, every family in Britain is better off."
