Nicola Sturgeon is expected to reject George Osborne’s income tax boost for higher earners when Scotland’s new tax powers come into force next year, to avoid further spending cuts.

The first minister is due to set out the Scottish National party’s tax plans in the coming week before campaigning for May’s Holyrood elections formally starts, with the £14bn worth of new tax and welfare powers already emerging as dominant topics.

Scottish ministers reacted angrily to the budget overall on Wednesday, accusing Osborne of cutting Scottish spending by £1bn in real terms by 2020, with further reductions likely from £3.5bn in additional cuts at UK level which Treasury documents had yet to set out.

Pointing at £1bn worth of tax cuts for Scotland’s beleaguered North Sea oil and gas sector, the UK government said Scotland’s budget would rise by a further £620m in cash terms over the next four years above the budget set by Osborne last November. It would reach £30bn by 2019-20.

Introduction of the new tax powers under the Scotland bill came a significant step closer on Wednesday morning after the Scottish parliament voted them through, clearing the way for Westminster’s final consent within weeks.

The Scottish Conservative leader, Ruth Davidson, embraced the chancellor’s income tax changes, which are estimated by the economist Prof David Bell to save about £190m for 372,000 Scottish voters on the higher 40% tax band.

Sturgeon is under intense pressure from Labour and the Liberal Democrats to increase all Scottish income tax rates by 1p in the pound from this April to reinvest in higher public spending – a strategy already rejected by the Scottish government.

The Scottish Labour leader, Kezia Dugdale, is pledging to reintroduce a 50p top rate of tax on the highest earners, allowing Sturgeon to portray herself as the moderate, centrist party leader by rejecting that measure.

Sturgeon faces losing more tax revenue than expected after the Treasury increased air passenger duty from this April and again next year. Using new powers coming into force next April, Sturgeon has pledged to abolish APD in Scotland, which currently raises £220m, by first cutting it by 50%.

Scottish government sources indicate Sturgeon favours holding the 40% higher rate at its current level, effectively freezing it next April. Stewart Hosie, the SNP’s Treasury spokesman at Westminster and an ally of the first minister, said raising the threshold was unfair when welfare was being cut.

“What I’m saying, and I couldn’t be much clearer, is that to increase the 40p threshold way above inflation – while taking billions from disabled people – doesn’t seem fair, doesn’t seem balanced and doesn’t seem a very sensible thing to do,” he told BBC News.

Davidson, who has dropped plans for a Scottish tax cut below the UK rate because of Osborne’s further cuts to save £3.5bn by 2019, said Scotland would become the most heavily-taxed part of the UK if Sturgeon froze the 40% rate.

“Putting up taxes in Scotland above those in the rest of the UK will send out exactly the wrong message – we would be putting up a sign at the border saying ‘closed for business’,” Davidson said.

Bell, an adviser to the Institute for Fiscal Studies, said changing the 40% band was chiefly a political decision. “Nobody is going to stop working or change the way they are paid [to avoid the Scottish rate]; it’s just not worth it for that amount of money,” he said. “It is emblematic on the political side, though, so it is a big deal.”

With an eye clearly on May’s elections, where the Tories are hoping to overtake Labour as Holyrood’s second largest party, Osborne unveiled eye-catching local spending pledges to invest £5m in a new V&A-backed museum in Dundee and £5m for a leisure centre in Helensburgh, close to the UK’s nuclear submarine base at Faslane. He said city deals to bring in extra funding were being developed for Edinburgh and Inverness.

Dugdale said it was a “typical Tory budget”, cutting taxes for the wealthy and reducing spending for the poorest. “This is the last time a UK chancellor will set the income tax rates for Scotland,” she said. “With the new powers we will soon have in the Scottish parliament, we will reverse George Osborne’s tax cut for the top 15% and invest in our public services.”