Millions of Australians may not lose a tax benefit after all when Treasurer Josh Frydenberg hands down his budget on May 11.

The low- and middle-income tax offset (LMITO), which is worth up to $1080 and benefits people with a taxable income between $48,000 and $90,000, ends in June.

But media reports suggest this bonus will be extended for another year at a cost of about $7 billion.

The Treasurer is giving nothing away at this stage.

“The government doesn’t comment on budget speculation,” a spokesman for Josh Frydenberg said on Thursday.

The tax offset was set up as a one-off economic stimulus measure during the coronavirus pandemic.

Analysts at the Bankwest Curtin Economics Centre have estimated about 3.4 million taxpayers – 50 per cent of whom were women – would lose out if it was dropped.

The tax offset is claimable when people submit their tax returns.

Additional funding for aged care is expected to be a key component of the budget, with media reports suggesting it could be a $10 billion package.

In the past couple of days the government has set aside more than $1 billion in climate change initiatives – $565 million for international collaboration on low emissions technology, a $263 million investment for carbon capture and storage and another $275.5 million to set up regional hydrogen hubs.

Mr Frydenberg will have the opportunity to give an update of the government’s fiscal strategy when he addresses an audience in Perth.

Last week, after another exceptionally strong labour force report that showed the unemployment rate had dropped to 5.6 per cent, Mr Frydenberg indicated he would provide such an update prior to budget night.

Before the the 2020 October budget – which was delayed because of the pandemic and contained hundreds of billions of dollars of stimulus measures to counter it – Mr Frydenberg said budget repair would only start after the jobless rate was comfortably below 6 per cent.

“We’re not comfortably below 6 per cent today and we’re not out of the pandemic,” he said.

Economists like Chris Richardson believe the government should be more ambitious in its unemployment target.

“The Reserve Bank aims for an unemployment rate of 4.5 per cent,” Mr Richardson, a partner at Deloitte Access Economics, said.

“The government should shift its line in the sand … aiming for an unemployment rate comfortably under 5 [per cent].”

-AAP