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Senate Passes Fiscal Cliff Deal, 89-8

WASHINGTON, DC - DECEMBER 31:  U.S. Vice President Joe Biden arrives for a closed-door meeting with Senate Democrats to urge them to support a tentative tax agreement with Senate Minority Leader Mitch McConnell (R-KY) on Capitol Hill on December 31, 2012, in Washington DC.  The House and Senate are both still in session on New Year's Eve to try to deal with the looming fiscal cliff issue. (Photo by Drew Angerer/Getty Images)

President Obama and Senate Republicans have reached a deal to raise taxes on the wealthy and take much of the bite out of fiscal cliff. The agreement passed in the Senate early Tuesday morning by a vote of 89 to 8. It came after days of furious negations and a pact made between Vice President Biden and Senate Minority Leader Mitch McConnell.

For the first time in 20 years, income taxes will rise. Individuals making more than $400,000 and households making more than $450,000 will pay 39.6 percent in taxes, up from the Bush-era rate of 35 percent. Obama campaigned on raising taxes above $250,000 but negotiations with Republicans almost doubled that limit. (Democrats secured a $30 billion extension of unemployment benefits.) Tax breaks and credits will be phased out for those earning more than $250,000. The estate tax will rise to 40 percent. And finally, the Alternative Minimum Tax will not hit 30 million new households as the result of a proposed permanent fix.

The sequestration – an automatic $110-billion cut to defense and domestic programs – would be put off for two months.

The deal does not touch the debt ceiling.

A House vote is expected before Wednesday.

This post has been updated throughout.

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Photo: Drew Angerer/2012 Getty Images