Rival Democrats and Republicans have agreed to allow Bush-era tax cuts to continue for another two years, an uneasy compromise announced Monday by US President Barack Obama, dpa reported.
Obama said he was "not willing" to allow the "chilling prospect" of taxes to go up in January for the middle class, as had been threatened by opposition Republicans if they did not get their way on tax relief also for the wealthy.
Democrats wanted the tax cuts extended only for households making 250,000 dollars or less per year, while Republicans have insisted they be extended for all income earners.
The compromise was reached after Obama's hard negotiations with Congressional leaders. The two-year deal will also allow an extension of jobless benefits that were to expire for 2 million people at the end of December.