After months of budget brinkmanship, Americans are digesting news that the country has been pulled back from the edge of a so-called “fiscal cliff.”
In what is seen as a clear victory for president Barack Obama, painful tax hikes for almost all US households have been averted.
Obama cut short a Christmas holiday to help finalise the deal.
The agreement raises taxes for the wealthy, while spending cuts have been delayed for two months.
Ordinary Americans will not emerge completely unscathed though. A temporary payroll tax cut is coming to an end.
“Something needed to be done about the economy. We can’t just cross our arms, there is too much to do. Not only that, but so many people have to suffer for this. It’s unfair,” said Victor Quintana, who works near Wall Street in New York.
Geraldo Lodolini, also in New York, commented: “The working class always pays. The rich never does. I just don’t believe any of it.”
Congress passed the Senate-backed bill at a late night session.
There was pressure for a deal to be struck before markets reopened on Wednesday, as fears mounted that the world’s largest economy could be pushed into recession.