The U.S. House of Representatives passed legislation which prevents income tax increases on the bulk of Americans and also prevents large cuts in government programs.

The fiscal cliff crisis was resolved for now when the House approved legislation passed late on New Year’s Eve by the Senate. The House vote was 257 to 167, with 85 Republicans voting with 172 Democrats to allow incomes taxes to increase for the first time in 20 years. The No vote consisted of 151 Republicans and 16 Democrats.

The legislation passed the Senate at 2am on New Year’s Day by 89 votes to 8.

The legislation increases taxes on household incomes over $400,000 for individuals and $450,000 for couples. It makes permanent tax cuts for incomes below that level. The American Taxpayer Relief Act of 2012 also delays the budget sequestration by two months. The tax increases are expected to raise $600 billion over ten years, about one-fifth of the revenue that would have resulted from no action. It was widely believed that a failure to act could have led to a recession in the U.S.

Following the House vote, President Barack Obama held a media briefing just before midnight. Whilst praising the passage of the legislation, he said there was more to be done on reducing the nation’s budget deficit.

Post from Colleen Curtis on the White House blog.

What You Need to Know About the Bipartisan Tax Agreement

UPDATE: The American Taxpayer Relief Act of 2012 was also passed by a bipartisan majority in the House of Representatives on January 1, 2013.

President Obama has repeatedly called this a make-or-break moment for the middle class. That’s why we worked with Republicans and Democrats in Congress to reach an agreement that keeps income taxes low for the middle class and helps to grow the economy. And as the President promised, millionaires and billionaires will also begin doing more to help pay down the deficit through a combination of permanent tax rate increases and reduced tax benefits. [Read more…]