Preheat your oven to 350°F. Grease your bundt pan generously with nonstick spray that contains flour, or grease and lightly flour the pan. This helps the cake release cleanly after baking.

In a medium bowl, whisk together the flour, baking powder, baking soda, and salt. This ensures even distribution and keeps lumps out of your batter.

In a large mixing bowl, cream the softened butter, brown sugar, and granulated sugar until light and fluffy, about 2–3 minutes. This adds air to the batter, which helps give the cake its soft texture.

Beat in the eggs one at a time, mixing well after each. Then add in the sour cream and vanilla extract. The batter might look a little curdled at this stage, but it will smooth out when you add the dry ingredients.

Gradually add the dry ingredients to the wet, mixing on low speed just until combined. Toss the butterscotch chips with 2 tablespoons of flour, then fold them gently into the batter. This keeps them from sinking to the bottom of the pan.

Pour the batter into the prepared bundt pan and smooth the top. Bake for 50–55 minutes or until a toothpick inserted in the center comes out clean. Let the cake cool in the pan for 10–15 minutes, then carefully invert onto a cooling rack to cool completely.

In a small saucepan over low heat, melt the butterscotch chips and butter together, stirring often. Once smooth, remove from heat and whisk in the milk and powdered sugar until glossy. Let it cool slightly before drizzling over the cooled cake.