A 1.25% rise in National Insurance will be reversed from 6 November and the government will axe a planned tax rise to fund health and social care.
The NI rise was introduced in April under former chancellor Rishi Sunak, but during the Tory leadership race Liz Truss pledged to change it.
New chancellor Kwasi Kwarteng made the announcement ahead of a “mini-budget” on Friday.
He said: “Taxing our way to prosperity has never worked.
“To raise living standards for all, we need to be unapologetic about growing our economy. Cutting tax is crucial to this.”