Congress passes legislation to thwart fiscal cliff

Bill postpones across-the-board spending cuts.

Happy New Year, blog readers! The legislation passed by Congress, which the president is expected to sign this week, deals primarily with expiring tax laws that would have raised taxes on Americans at all income levels. The new legislation raises income tax rates on families making more than $450,000 a year (and individuals making more than $400,000), and extends tax benefits for middle-income families. Those benefits include the American Opportunity Tax Credit, which allows students and their parents to claim up to $2,500 a year for college expenses. Research and development tax breaks, such as the one for investment in wind energy, also were extended.

The new legislation does not eliminate the sequester, but postpones its effects for two months, giving Congress extra time to negotiate a solution. The new bill also does not raise the debt ceiling. The U.S. hit its borrowing limit on New Year’s Eve, and the Treasury Dept. is taking administrative measures to delay the need to raise the debt ceiling in order to avoid default, for what also is projected to be around two months.

More details will be available within the next few days.