Two million people could be removed from paying income tax altogether from today as a raft of reforms come into effect.
Among the changes are a rise in the personal allowance which will mean no one pays any tax until they earn more than £9,440.
The threshold for the higher rate of tax - above which people pay tax at 40% - will also drop from £34,370 to £32,010, excluding the personal allowance.
At the same time the top rate of income tax falls in 2013/14 from 50% to 45% for those whose taxable income exceeds £150,000.
And the start of the new financial year also signals a rise in basic state pension to £110.15 per week, an increase of 2.5%.
But there will be a freeze on the level of income pensioners can receive before they have to pay tax - the so-called "granny tax".
The tax allowance for people aged 65 and older is set at £10,500.
Last week, housing benefit was cut for council house tenants with more bedrooms than they need - dubbed the "bedroom tax".
Council tenants have money cut if they have more bedrooms than they need The annual increase in tax credits and other working-age benefits will also be cut to just 1%, well below the rate of inflation.
But Labour claims UK households will be worse off.
Shadow Chancellor Ed Balls said: "The independent Institute for Fiscal Studies shows very clearly that, since 2010, the average family is £890 worse off, a one-earner family where the mum or dad stays at home with children is £3,900 worse off.
"The reason is that the increase in the personal allowance over the last couple of years was completely outweighed by higher VAT, the freeze on child benefit and the cuts to tax credits.
"Is this the day to cut taxes for millionaires, for the richest people in our society when everyone else is worse off and struggling? It's completely the wrong priorities. It suggests that David Cameron and George Osborne are completely out of touch with the realities of the lives of families in our country."
Unite union's General Secretary Len McCluskey was equally scathing about the changes. He said: "Millionaires will be raising a glass of champagne to George Osborne this weekend as he slashes the incomes of people struggling to get by to give handouts to the rich.
"This is not the way to recover our failing economy. Creating real jobs and paying decent wages, including a one pound increase on the minimum wage, will bring down the benefits bill and get people spending again."
The Prime Minister took to Twitter to highlight the increase in the personal tax allowance. He wrote: "From today 24 million people will be paying £600 less income tax than in 2010."
Mr Cameron also included a link to a new Conservative poster outlining the change with the headline "Help for Hardworking People".
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