Treasurer Cameron Dick has forecast a surplus of almost $5.2 billion in 2022/23 in his mid-year budget update, after forecasting a $1 billion deficit six months ago.
Higher coal prices have helped bag an extra $2.95 billion in royalties after the government introduced new windfall rates in June.
Strong employment growth has lifted payroll tax takings to $5.46 billion, about $218 million more than predicted, while stronger consumer spending will lift GST returns $690 million higher to $18.5 billion.
Mr Dick is predicting surpluses for three of the next four years with the only blip being a $458 million deficit in 2023/24.
"The deficit that was originally forecast for 2022-23 is history," he told reporters on Wednesday.
"There's only one more deficit left in our forward estimates."
Mr Dick said coal prices have remained high for longer due to flooding in NSW mines constraining supplies and more demand in Europe due to the Ukraine war.
The windfall coal royalty rates have provoked a furious backlash from miners, who have launched an advertising campaign against the hikes, and warnings from Japanese Ambassador Shingo Yamagami about investment risks.
The treasurer is unapologetic about raking in $10.7 billion in royalty payments in 2022/23, saying it will be partly used to fund decarbonisation plans, critical minerals mining and regional infrastructure.
"Coal royalties are worth fighting for. Queenslanders deserve their fair share and they will receive it," Mr Dick said.
"The windfall profits made by coal companies are also a win for the people who own these mineral resources, the people of Queensland."
While coal prices are expected to fall from the second half of 2023, the windfall rates will take total income from coal to almost $21.55 billion over the next four years.
The gross state debt forecast for the current financial year has been slashed by $2.4 billion to $64 billion and it's expected to peak at $87 billion in 2025/26.
"It's important to make the point that we have that big buffer in place because there are significant challenges ahead," Mr Dick said.
"Energy prices, global inflation, the risk of global recession, bad weather.
"As difficult as the pandemic has been, the reality is that 2023 could be far more difficult in different ways.
"There's uncertainty on the horizon.
"But what we've done with royalties means Queensland is ready for whatever comes our way next. Queenslanders can be confident we have prepared our budget and economic position to buffer our state."
Queensland's economic growth is forecast to be around 2.5 per cent until 2023/24.
The state's four per cent unemployment rate is expected to rise marginally to 4.25 per cent and the current 5.75 per cent inflation rate is expected to fall to 2.75 per cent by 2023/24.
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