On Thursday night, the House gave a final approval on the measure. It passed in the Senate the day before and had bipartisan support in both houses.
The bill will extend the /*Bush-era tax cuts*/ for all Americans for two more years. The package will save taxpayers, on average, about $3,000 next year.
Failure to pass the bill would have resulted in the tax cuts expiring for everyone on New Year's Day.
The package also cuts social security taxes for most people and extends unemployment benefits for an additional 13 months for millions of Americans.
But it won't help hundreds of thousands who have been unemployed so long they've used up all benefits available to them.
Obama said that the tax bill will protect the middle class, grow economy and create jobs.
The Associated Press contributed to this report.