Middle income families would be given a 10% tax cut under a system put forward by a commission set up by the Scottish Conservatives.
A new 30% income tax rate for the co-called squeezed middle would “ensure fewer aspirational families are dragged into the upper band”, the Independent Commission for Competitive and Fair Taxation in Scotland said.
The middle rate would kick in for households at the current lower threshold for higher rate taxpayers of £42,385, but the commission did not specify an upper limit.
The plan to bring thousands of families across Scotland out of the higher rate band comes 100 days before the Holyrood election, with tax set to be a key battleground.
As well as relieving the burden on “aspirational families”, the 30% rate would allow middle earners to spend more of their earnings to the benefit of the wider economy, the commission’s chairman Sir Ian McMillan said at the report’s launch.
The current income tax model includes a basic rate of 20% for incomes up to £42,385 and a higher rate at 40% for those earning above that and up to £150,000.
Other proposals from the commission include ending the council tax freeze and introducing rise caps, scrapping altogether the tax on the purchase of homes known as Land and Buildings Transaction Tax and replacing the Air Passenger Duty with a system linked to distance travelled.
Business rates should be frozen for at least five years, the report added.
The commission was formed in response to an invitation from Scottish Conservatives leader Ruth Davidson, but the panel insists they are independent and would have arrived with the same recommendations if any other party had come to them.
Its brief was to come up with recommendations as Holyrood takes on a raft of new taxation powers, including setting income tax rates and bands.