The Scottish government is set to plough £144million into local authorities in a bid to cover 60% of the costs of increased National Insurance contributions.
The BBC reports Finance Secretary Shona Robison said the funding would equate to a 5% increase in council tax and would help avoid the need for local authorities to increases their charges.
Chancellor Rachel Reeves last year announced an increase in the rate of employer National Insurance contributions for employers - from 13.8% to 15% in April.
The threshold at which employers start making contributions is also being lowered from £9,100 to £5,000.
It has been estimated the Scottish government would need around £550million to cover the cost of the increased National Insurance contributions for public sector workers.
That figure then rises to £750million when other, indirect employees are taken into account.
The BBC reports SNP ministers have been advised to expect around £300million in compensation from the Treasury based on the Barnett formula giving a share of spending in England to devolved nations.
But Ms Robison branded the proposed compensation from the Treasury "unacceptable" and argued it should "fully fund the actual costs for Scotland's public sector".