The Smith Commission recommends the full control over income tax rates and bands be devolved to Holyrood
The commission, set up after the "No" vote in the independence referendum, reached an agreement at its final meeting
It says a share of VAT should be assigned to the Scottish Parliament, and that Air Passenger Duty should be fully devolved
It also recommends Holyrood be given powers to allow 16 and 17-year-olds to vote in Scottish elections
The Scottish Parliament will be given powers to create new benefits in devolved areas and make discretionary payments in any area of welfare. Also a range of other benefits that support older people, carers, disabled people and those who are ill will be fully devolved.
The Scottish Parliament will be given the power to set income tax rates and bands on earned income and will retain all of the income tax raised in Scotland. A share of VAT will be assigned to the parliament and Air Passenger Duty will be fully devolved.
Lord Smith says the Scottish Parliament will be "more accountable" following the agreement.
Lord Smith describes the agreement between the five parties as "an achievement in itself", following the independence referendum.
Lorna Gordon
BBC News Scotland correspondent
tweets:, external Smith commission report runs to 28 pages - sets out the agreement reached between all five of Scotland's main political parties.
The press conference on the Smith Commission has begun at the National Museum of Scotland.
This is the book that will set out what new powers the commission has recommended be devolved to Holyrood.
The SNP tweets, external this picture of the Smith Commission, ahead of the conference.
Image source, SNPThe press are setting up for Smith Commission conference, which begins around 09:00.
You can watch the live stream of the conference by clicking on the live coverage section on this page.
Professor Richard Kerley, Chair of the Centre of Scottish Public policy, told Radio Scotland's Good Morning Scotland what would happen if the Scottish Parliament gets full control over income tax rates and bands.
He said: "How it would work in practice is to build on the arrangements that are currently being put in place under the 2012 act for the Scottish Parliament to levy a proportion of income tax within Scotland. Whether that would be exercised through HMRC is clearly still to be determined.
"In effect, if what we are being told is the entry point for income tax - that is the personal allowance - retains a UK-wide level, then over and above that it would be up to the Scottish Parliament to recommend the rate in the pound of income tax and the bands at which income tax is levied."
'The Scottish Parliament has had 15 years of spending power with very little taxation accountability.
Image source, Getty Images'That's about to change, a lot, if the Smith Commission "heads of agreement" translate into workable new devolution legislation.
'There is a political case for such radical changes.'
Read the analysis of BBC Scotland's Business and Economy Editor Douglas Fraser
His name may be familiar to you after the Commonwealth Games in Glasgow, as he served as chairman of the organising committee.
Image source, PALord Smith of Kelvin was then appointed to oversee the process of devolving more powers to Scotland.
Ten people - two representatives each from the SNP, Labour, the Conservatives, the Liberal Democrats and the Greens - made up the Smith Commission.
The recommendations of the Smith commission, chaired by Lord Smith of Kelvin, are to form the basis of UK government legislation on more Scottish powers although they would not be delivered until after the Westminster election in May 2015.
Glenn Campbell
BBC Scotland news
The Smith commission on further devolution has concluded its talks with the five political parties represented in the Scottish Parliament. They have reached agreement on a package of additional powers, which is to be announced in Edinburgh on Thursday.
The commission's recommendations are expected to include:
the full devolution of income tax rates and bands, with the personal allowance (the threshold above which tax is paid) continuing to be set by the UK government
assigning a proportion of the VAT revenues raised in Scotland to the Scottish budget
giving Holyrood control of air passenger duty and - eventually - the aggregates tax
devolving welfare measures including attendance allowance, carers' allowance and some cold weather payments
retaining UK control of all the benefits being merged into universal credit, while introducing some devolved flexibility over aspects such as the frequency of payments
devolving the work programme
putting Holyrood in charge of its own elections, which could allow MSPs to give 16 and 17 year olds a vote in the 2016 Scottish Parliament election
The BBC understands the commission on devolving powers to the Scottish Parliament is to recommend it has full control over income tax rates and bands.
Image source, Getty ImagesThe report is not expected to call for personal allowances - the threshold at which tax is paid - to be devolved.
The Smith Commission, which was set up after the "No" vote in the independence referendum, reached an agreement at its final meeting in Edinburgh and its full report will be published on Thursday morning.
Graham Fraser
BBC Scotland
Good morning, and welcome to our live coverage of the Smith Commission.