Scottish retail, hospitality, leisure and aviation businesses will not pay non-domestic rates throughout the next financial year, under plans announced by Finance Secretary Kate Forbes.
The extension comes after a further £1.1bn of coronavirus support funding was promised by the UK Treasury.
The Federation of Small Businesses said it would help smaller firms survive.
The extension was also welcomed by opposition MSPs, who said they had been calling for such a move.
Ms Forbes had already announced plans for a three-month extension to non-domestic rates relief in her budget last month.
In a statement to MSPs, she said this would now be extended to the full financial year 2021/22.
"When I presented the budget last month I was clear that if resources allowed I would extend 100% non-domestic rates relief for properties in the retail, hospitality, leisure and aviation sectors for all of next year," she said.
"I am now in a position to provide that certainty to business, meeting the number one ask of the business community and demonstrating our commitment to supporting the economy."
The rates relief will also apply to newspaper offices, which were removed from the initial list but have now been reinstated following lobbying from the sector and political pressure.
Independent schools, which were to lose charitable rates relief from April, have had that postponed again, keeping the rates relief until 2022.
The plans for the additional £1.1bn in funding announced by the Treasury also include:
- £120m for mental health
- £120m for affordable housing
- £100m to support people on low incomes
- £60m for schools to help pupils catch up on missed education
- £60m for health service recovery
- £45m to reduce emissions from heating.
In addition, councils will receive an extra £275m in the current financial year to address Covid pressures, and £40m is being made available to support the safe reopening of schools.
The Scottish government currently does not hold enough votes to pass its budget at Holyrood and is negotiating with other parties in an effort to secure support.
Conservative MSP Murdo Fraser said his party had "repeatedly demanded" the extension to rates relief, which would give businesses "some welcome breathing space".
However, he questioned whether business support funds were reaching firms that are "teetering on the edge".
'Back on their feet'
Scottish Labour's interim leader Jackie Baillie also welcomed the move, which she said had been "a key ask" for her party.
But she said the eligibility criteria for business support was "too tight", and that an increase in funding for mental health "falls well short of what is required".
Andrew McRae, Scotland policy chairman for the Federation of Small Businesses, said extending rate relief would "allow many more smaller firms to make it through to the end of this crisis and help them get back on their feet when the economy re-opens".
He said that if larger firms return the savings from the relief, as some major supermarkets have done, this money should be used to give local businesses a "shot in the arm".
David Lonsdale, director of the Scottish Retail Consortium, said: "This is a bold and significant move and a vital shot in the arm for the sector, much of which remains closed and faces an uncertain future."
The Scottish Licensed Trade Association said it was a "much-needed lifeline" for the sector.