George Osborne has announced cuts to the top rate of income tax - and an increase in the amount of money people can earn before they start paying tax.
The chancellor said the 50p rate was uncompetitive, raised "next to nothing" and would fall to 45p next year.
The personal tax allowance will rise to £9,205 for millions of working people while child benefit cuts will be phased in for those on more than £50,000.
Labour's Ed Miliband said millionaires would get a "massive income tax cut".
BBC political editor Nick Robinson said the chancellor had taken a huge political gamble, that by arguing that overall the rich would pay more, the public would overlook what amounted to a significant tax cut for tens of thousands of wealthy people.
Delivering his third Budget, Mr Osborne also said tobacco tax would rise by 5% above inflation, adding 37p on 20 cigarettes. The scheduled 3p rise in fuel duty in August will go ahead.
His plans would reward work, he said: "This Budget supports working families and helps those looking for work. It unashamedly backs business. And it is on the side of aspiration: those who want to do better for themselves and for their families."
He defended the politically risky decision to cut the top rate of tax by saying five times as much would be raised from the wealthiest by other tax and anti-avoidance measures being brought in.
A report into the highest rate, introduced by Labour in 2010, had found it had caused "massive distortions" - and had raised just a third of the £3bn initially predicted, Mr Osborne said.
"No chancellor can justify a tax rate that damages our economy and raises next to nothing."
Stamp duty changesThe threshold at which income tax is paid had been due to rise to £8,105 next month and will now increase to £9,205 in 2013.
Mr Osborne said it would benefit "every working person on low or middle incomes" and amounted to an extra £170 a year each after inflation.
A new 7% rate of stamp duty would be charged on properties worth more than £2m - and anyone trying to buy a £2m home through an offshore company would face a punitive 15% stamp duty rate.
Child benefit had been due to be removed from all families with at least one parent paying the higher, 40% rate, of income tax - about £43,000 - from January 2013.
But Mr Osborne said he wanted to avoid a "cliff edge" effect - so it would now only be withdrawn when someone in a household earned more than £50,000, at a rate of 1% of the benefit for every £100 up until £60,000, when it would be cut entirely.
It meant 750,000 more households would not now lose all their child benefit.
Corporation taxHe said corporation tax would be cut more than expected from next month, to 24% rather than 25% as planned, falling to 22% by 2014, something he said would be "an advertisement for investment and jobs in Britain".
Mr Osborne also announced there would be limits on uncapped tax reliefs and said he would get rid of age-related allowances, introducing a new single personal allowance for all.
In his last big financial update - the Autumn Statement in November - the chancellor lowered growth forecasts for the UK economy and extended the period of spending cuts by a year to 2016-17.
But he was able to nudge up the growth forecast for 2012 - which had been revised down from 2.5% to 0.7% - to 0.8% and said he was "on course" to eliminate the structural deficit by 2016/7.
He also said the Independent Office for Budget Responsibility expected the UK would avoid a "technical recession" - but that the eurozone crisis and a spike in oil prices continued to pose risks.
In other announcements, he said the state pension age would be automatically reviewed, to ensure it kept pace with changing life expectancy.
More help for the armed forces was announced - with £100m improvements to accommodation.
And he said the UK must "confront" the lack of airport capacity in the south east - and more would be announced this summer. The government scrapped plans for a third runway at Heathrow.
But Labour Leader Ed Miliband labelled it a "millionaire's budget".
"Tax credits cut, child benefit taken away, fuel duty rising - and what has he chosen to make his priorities?
"For Britain's millionaires, a massive income tax cut each and every year."
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