Coal royalties will be hiked in NSW for the first time in nearly 15 years, delivering a billion-dollar boost for the state’s ailing budget.

Treasurer Daniel Mookhey on Wednesday revealed coal royalties would be increased by 2.6 percentage points from July next year, delivering taxpayers an expected windfall amid high global coal prices.

The change would leave the state budget more than $2.7 billion better off over the four years from 2024/25 onwards, the government said.

It will replace an emergency domestic coal cap put in place by the former coalition government in December last year.

The new coal royalty rate in the state will be up to 10.8 per cent, with discounts applied for underground mines.

The government said the change was developed after consultation with the mining industry and key trading partners.

Mr Mookhey said the shift was a fair outcome for the state and it replaced an out-of-date royalty regime.

“The new scheme will make sure the people of NSW share in the wealth their resources create,” he said.

The money would be spent on essential services and providing cost-of-living relief to families, the government said.

The Minns Labor government has been priming taxpayers for a brutal budget, weighed down by growing debt, rising interest rates and a fast-rising bill for public sector pay increases.

– AAP