The tax-free allowance will rise again next year to £10,000, fulfilling a commitment from the front page of the Liberal Democrats' 2010 General Election manifesto and resulting in a total tax cut of £700.
Commenting, Liberal Democrat Chief Secretary to the Treasury, Danny Alexander said:
"If you get paid today, take a moment to compare your pay slip to last month's. You'll see that Liberal Democrats have cut your taxes.
"From this month, the Liberal Democrats will have lifted 2m people out of Income Tax and given a tax cut of £600 to more than 20m people.
"It has taken the Liberal Democrats being in Government to deliver the largest programme of tax cuts for working people for a generation.
"The Liberal Democrats are the only party that will radically cut taxes for people on low and middle incomes to build a stronger economy and a fairer society so that everyone can get on in life."