Premier and Treasurer Peter Gutwein on Thursday handed down the Liberal government's 2021/22 budget, his eighth since the party came to power in 2014.

Health funding has increased by $900 million over the forward estimates to $10.7 billion, including an extra $198 million to meet increasing demand on major hospitals.

"The challenges posed by the pandemic remain an immediate and real threat to our future," Mr Gutwein said.

"The potential for an outbreak of the virus, which would require us to lock down, is very real."

Tasmania, which hasn't gone into lockdown since the beginning of the pandemic, has been quick to shut out virus-hit mainland states and has had just one COVID-19 case this year.

Mr Gutwein has squirrelled away $300 million in the treasurer's reserve over the forward estimates to deal with unexpected pandemic impacts.

It means the state's projected return to operating surplus has been pushed back one year to 2023/24, in line with a commitment made by Mr Gutwein when he was returned to power at the May election.

Tasmania is predicted to have a $690 million deficit in 2021/22 and is forecast to return to a modest $39 million surplus in 2023/34.

The state's net debt is forecast to more than double from $1.7 billion in 2021/22 to almost $3.5 billion in 2024/25, something Mr Gutwein believes is manageable.

It is an improved position from the $4.4 billion of net debt predicted for 2023/24 in last year's budget.

Tasmania had been net debt free in 2019/20, before the pandemic hit.

Budget forecasts are based on the assumption Tasmania continues to experience favourable virus containment outcomes and there are no extended lockdowns.

The ailing tourism industry has been given an additional $18 million for marketing to ensure Tasmania is "front and centre" as a destination when people can travel again.

Mr Gutwein said the state government would set up Renewables, Climate and Future Industries Tasmania at a cost of $15 million to foster investment and growth in the sector.

Tasmania is powered by 100 per cent renewable energy, predominantly hydro-generated electricity.

"We have achieved our 2050 net zero emissions target for the last five years in a row and in six out of the last seven years," Mr Gutwein said.

"We are at an important and defining moment. A moment that we must be prepared to grasp as it will define the state for the next 100 years."

Mr Gutwein said the $4.6 billion infrastructure program and other employment initiatives would create more than 28,000 jobs over four years.

"While it is a time of uncertainty for Tasmania, it is also a time of opportunity," he said.

"Our economy is strong, we live in one of the most beautiful places in the world and our businesses and our people are confident."

As the state chases a standalone AFL team, $65 million has been given to Stadiums Tasmania to oversee the development of stadium assets.

Land tax thresholds have been changed, meaning 4000 people will no longer pay and more than 70,000 will have their bill cut by up to $613 per year.

TASMANIA BUDGET 2021/22:

* Deficit: $690 million

* Revenue: $7.3 billion

* Expenditure: $7.9 billion

* Net debt (2021/22): $1.7 billion

* GST revenue: $3 billion

* Unemployment: 5.5 per cent

* Growth: 4 per cent

Australian Associated Press