All taxpayers in Scotland will feel the financial impact of John Swinney's Budget.
It had been predicted that the finance secretary would target big earners, but those with smaller wage packets have not escaped his attention either - with tax thresholds for lower earners being frozen.
Vishal Chopra, KPMG UK's head of tax in Scotland, said: "John Swinney had some difficult decisions to make against a turbulent economic backdrop.
"To combat the cost-of-living crisis, higher earners were chosen to shoulder more of the tax burden. As expected, Mr Swinney followed Westminster by reducing the threshold at which Scottish taxpayers start to pay the top rate of tax from £150,000 to £125,140.
"He also increased the higher rate of tax from 41p to 42p and the top rate from 46p to 47p - further increasing the disparity with taxpayers south of the border.
"Starter, basic and intermediate, and higher income tax thresholds have also been frozen in line with Westminster, which effectively means a tax increase for many as they enter the higher tax bands as their salaries rise - this will impact all taxpayers, not just the highest earners."
Striking a balance
The finance secretary said his Budget tax decisions had sought to strike a balance between ensuring there is enough money for public spending and acknowledging the challenging economic conditions facing households and businesses.
He added: "The Income Tax proposals I have put forward will enhance the Scottish Government's progressive approach to tax.
"Using the additional revenue raised through our tax changes will allow us to make a £1billion uplift to the NHS budget, above and beyond the frontline health consequentials we have received from the UK Government.
"At the same time, the majority of people in Scotland will still be paying less in taxation than if they lived in the rest of the UK.
Under the changes announced yesterday:
- A worker on a £50,000 salary in Scotland will pay an extra £63.38 in tax compared with this year, and £1,552 more per year than someone on the same money elsewhere in the UK.
- Anyone earning £150,000 in Scotland will pay an additional £2,432.08 compared to this year, which will be £3,857 more than someone earning the same salary south of the border.
Worries for business leaders
Business leaders expressed worries about the impact of the tax changes on the economy north of the border.
Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce, said: "The Income Tax rises are a significant departure from the SNP's manifesto and will widen the gap between Scotland and the rest of the UK, which is a concern.
"Retaining our best talent - and attracting new talent - is one of the biggest challenges we face as we seek to grow our economy whilst dealing with a declining work-age population.
"We are going to make that very difficult if people and companies see this as a high tax location."
Scottish Labour predicted that people will not accept rising tax bills "if all they see is further decline in services".
Little focus on economic growth
In conclusion, Mr Borthwick said: "The most disappointing aspect of this Budget was the lack of a great deal of meaningful focus on stimulating the economy at a point where the OBR shows that economic growth in Scotland is even slower than in the rest of the UK.
"This risks a future downward spiral of further increasing tax rates to fund public services instead of creating the conditions that generate more tax revenues through increased output and business growth - that is the virtuous circle we need, but are not seeing from this Budget statement."