President Barack Obama has signed the bill passed by Congress this week to avert the so-called "fiscal cliff" of automatic, across-the-board tax increases and spending cuts.
Obama reportedly signed the bill late Wednesday night by auto-pen while vacationing with his family in Hawaii.
The Congressional Budget Office had said last year that the fiscal cliff, which was set to take effect this week, would send the U.S. economy back into recession.
The Senate passed the bill in the wee hours of Tuesday by an overwhelming bipartisan vote of 89-8 and then the House of Representatives followed suit with a vote of 257-167 late Tuesday night.
The legislation faced vehement opposition in the House from rank-and-file Republicans, who criticized the lack of major cuts to government social programs.
But Speaker John Boehner and Budget Committee Chairman Paul Ryan - the GOP's 2012 vice presidential candidate - both backed the late-hour deal negotiated by Vice President Joe Biden and Senate Majority Leader Mitch McConnell.
The bill extends decade-old income tax rate cuts for most Americans and postpones for two months the automatic cuts for the Pentagon and other government agencies that were established in the Budget Control Act of 2011.
"Thanks to the votes of Democrats and Republicans in Congress, I will sign a law that raises taxes on the wealthiest 2 percent of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America," Obama said shortly after the House vote.
The bill raises tax rates on incomes of up to $400,000 for individuals and $450,000 for couples - from 35 percent to 39.6 percent - and will provide the federal government with an estimated $620 billion in additional tax revenue over the next 10 years.
Individuals making $250,000 or more annually or couples making $300,000 or more per year will see their itemized deductions capped.
The measure, however, does not extend a payroll tax reduction instituted in 2011 as part of an economic stimulus plan. The expiration of that tax cut means American workers will see their net pay decrease starting Wednesday.
Unemployment insurance, which benefits an estimated 2 million Americans, will be extended for two years.
By delaying for just two months the start of some $1.2 trillion in automatic, across-the-board cuts to government agencies and programs, the deal virtually guarantees that new fiscal fights between Republicans and Democrats are just around the corner. EFE