"Two parties, ideologically divided, have agreed on a major issue for the American people," said Senate Majority Leader Harry Reid.
The bill, which was passed by the Senate on a 81-19 vote, would extend the Bush tax cuts for two years and extend unemployment benefits for 13 months. The bill would also provide $400 billion in cuts and tax credits to boost the economy.
"I am absolutely convinced that this tax-cut plan, while not perfect, will help grow our economy and create jobs in the private sector," said Obama on Wednesday morning before the vote.
The $858 billion package now goes to the House.
The bill's supporters realize it's not a perfect bill but believe it's worth passing anyway. The real test will be in the House of Representatives, where few Democrats support the plan.
Many House Democrats want to change the bill by jacking up the inheritance-tax rate, but it's not clear if they have the votes to make any of the changes they would like to make.
Democratic leaders, however, say they expect the bill to ultimately pass and become law.
The Associated Press contributed to this story.