After receiving approval from the House of Representatives in a 367 to 45 vote on Friday, the the Tax Relief and Health Care Act of 2006 passed the Senate by a 79-9 vote in a late night session that stretched into the early hours of Saturday morning. The bill now goes to the desk of President Bush for his signature.

Among the major measures in the tax bill are provisions to extend the R&D tax credit through 2006, which, at a cost of $16.5 billion, is the most expensive of the tax measures. Other tax extenders include the tuition expenses deduction, the New Market Tax Credit, the state and local sales tax deduction, the Earned Income Tax Credit for Combat Pay, the Qualified Zone Academy Bonds and the Teacher Classroom Expenses Provision.

Lawmakers also approved a number of trade provisions which extend preferential tariff regimes for developing countries exporting goods to the United States, such as the Generalized System of Preferences (GSP) program, which expires at the end of 2006, the Andean Trade Pact, the African Growth Opportunity Act (AGOA) program and a provision granting permanent normal trade relations (PNTR) status to Vietnam.

The bill also included measures that would expand Health Savings Accounts by, among other things, repealing the annual deductible limit on HSA contributions. The bill will allow individuals with HSA-qualified policies that have deductibles below the annual contribution limits (currently $2,700 for self-only coverage and $5,450 for family coverage) to contribute up to these maximum amounts each year. Currently, contributions are limited to the policy deductible if below the annual contribution limits. In addition, the bill allows full-year contributions for part-year coverage.

"This legislation reflects the must-do pieces of business we need to complete this year to prevent Americans from having to send more money to Washington, D.C. as they file their taxes next spring," commented House Ways and Means Committee Chairman Bill Thomas (R - Calif).

The bill was also supported by Charles Rangel, the New York Democrat in line to take over the chairmanship of the Ways and Means Committee in the next Congress.

“I support this overdue legislation because we need to give taxpayers and businesses certainty as they make financial plans for the coming years," he explained.

"This is not a perfect bill, but it provides tax credits and deductions for research and development, tuition and education expenses, state and local sales taxes and others that will help provide relief for millions of Americans," he added.