Theresa May has said soldiers who are stationed in Scotland will continue to be compensated for Scottish Government income tax rises.
The Prime Minister told MPs that "mitigation payments" will be paid for the second year to Armed Forces personnel affected by higher tax bills in Scotland.
The announcement will benefit around 7,000 servicemen and the Ministry of Defence (MoD) has increased the maximum payout from £1,500 to £2,200.
A divergence in rates means that income tax higher earners in Scotland pay more than they do in the rest of the UK. The announcement will see personnel paid between £12 and £2,200 in a retrospective single payment, covering the 2019/20 tax year, and it is expected to cost the Ministry of Defence £6 million.
The issue was raised in the Commons at Prime Minister's Questions by Scottish Conservative MP for Angus Kirstene Hair. She said: "Unlike most professions, those in the Armed Forces don't get to choose where they are stationed, but those in Scotland are undoubtedly delighted to serve there.
"Over 7000 of our Armed Forces personnel in Scotland are penalised by Nicola Sturgeon's high tax agenda. In my view that is simply unfair. Will the Prime Minister commit to extend the compensation paid to Armed Forces based in Scotland last year for another year, because we need to send a very clear signal that the Scottish Government is prepared to penalise our Armed Forces personnel but it is this Conservative UK government which will always ensure those who put their lives on the line for our country will come first".
In response Theresa May paid tribute to staff at RM Condor and said it was wrong that "brave and loyal service personnel" be left "out of pocket".
She added: "The SNPs tax hike both this year and next year unfairly hits a majority of our brave and loyal service personnel in Scotland. This leaves thousands of them out of pocket and this is wrong. So we will therefore, again, be providing financial mitigation payments to those negatively impacted in the tax year 2019/20 by the Scottish income tax hikes and by that Scottish income tax being higher than the UK, and a single financial mitigation payment will be made retrospectively in 2020.
"The Scottish Government may ignore our Armed Forces - we stand by them."
Scotland's finance secretary said the MoD "failed to consult" on the issue. Derek Mackay added that Armed Forces families in Scotland have access to services and benefits not available elsewhere in the UK.
Defence Secretary Gavin Williamson said: "Our Armed Forces are deployed where they are most needed and so it is wrong that personnel are penalised or left hundreds of pounds out of pocket because of decisions taken by the Scottish Government.
"As a result of this decision, I am extending the financial mitigation package for serving personnel in Scotland for another tax year. This demonstrates our commitment to treating all personnel both equally and fairly, wherever they serve."