Australians will devote almost one in every four dollars of their earnings to paying income tax and loan interest by the middle of next year, as hundreds of billions of dollars of fixed-rate mortgages roll off and workers lose wage gains to bracket creep.

Households spent a record 21 per cent of their gross income on home loan interest and income tax in the three months to June, and economists predict the drain on their budgets will increase even further without action.

This includes reform to address the growing reliance of the federal government’s revenue base on income tax, which former Treasury secretary Ken Henry last month labelled an ‘‘intergenerational tragedy’’. A near-record 16.2 per cent of household incomes were lost to income tax in June, according to AFR Weekend analysis of the latest national accounts.

That figure has risen sharply over the past year, and is well above the income tax burden faced by workers a decade ago, when income tax consumed about 12 per cent of household income.

Jarden chief economist Carlos Cacho said the recent increase in the tax burden came down to bracket creep.

‘‘It’s the gift that keeps on giving for the government budget,’’ Mr Cacho said.

‘‘We’ve had compensation for employees, which is the broadest measure of earnings, growing at almost 10 per cent . . . and that means that people are moving into higher tax brackets and paying more tax.’’

Because tax brackets are not indexed to inflation, increases in nominal wages lead to increases in average taxes because a greater proportion of a worker’s pay is pushed into the highest bracket applicable to them. Economists call this bracket creep.

The stage three tax cuts, which come into effect on July 1 next year, would slice about 1 percentage point off the income tax burden, Mr Cacho said, but the effect would only be temporary.

The tax cuts will consolidate the 32.5 cent and 37 cent tax brackets into a single 30 per cent bracket applying to incomes between $45,000 and $200,000.

UNSW Business School professor of economics Richard Holden said the increased share of income going to tax and loan repayments highlighted the urgency of calls for tax reform.

‘‘Given that roughly two-thirds of GDP comes from household consumption and that tax and interest are the two largest and most obvious first claims on income, it means it is going to put obvious downward pressure on consumption and therefore GDP growth,’’ he said.

‘‘Against that backdrop, it’s not too surprising that per capita GDP is going backwards.

‘‘We’re taxing incomes more and more and we’re out of step with other advanced economies in terms of the amount we tax income, relative to the amount we tax consumption,’’ he said.

Compounding pressure on household budgets is the rapid rise in interest rates, which has resulted in the share of gross income consumed by mortgage interest increase to 4.8 per cent from 2.5 per cent over the past year.

Mr Cacho said this figure would increase even further, because only two-thirds of the RBA’s interest rate rises had flowed through to borrowers due to the roll off of pandemic-era fixed-rate loans.

‘‘We’re currently at the peak pace of fixed rates rolling off onto variable of about $30 billion a month. As we move through this year, even if there are no further RBA hikes, we’re going to continue to see those interest payments increase,’’ he said.

Combined with interest on consumer debt such as credit cards and the cost of owner-operator business debt, Mr Cacho said almost one-quarter of gross household income nationally would be lost to income tax and interest.

Wentworth MP Allegra Spender, who is leading a push to review tax, said fixing the reliance on income tax remained ‘‘one of the most neglected but important issues facing the country’’.

‘‘It’s an issue that we find very hard to talk about but it’s an issue too important to ignore,’’ she said.