The 54 to 44 vote comes on the heels of House passage Wednesday night, giving the White House and congressional Republicans a legislative victory on President Bush's signature domestic-policy issue. Bush has said that he is eager to sign the bill.

"This legislation prevents a $70 billion tax increase on the American people and ensures continued economic growth and job creation. These provisions have proven to strengthen our economy and help provide an environment conducive to small-business investment and growth," said Senate Majority Leader Bill Frist, R-Tenn.

Democrats charged that the investor-oriented provisions are skewed too heavily toward the top end of the income scale and crowd out prospects for tax relief aimed more squarely at the middle class.

The bill centers on two provisions. It would extend for two years the 15% tax rate on capital gains and corporate dividends that would otherwise expire at the end of 2008.

It also provides a one-year patch that will ensure 15.3 middle-income Americans don't have to pay the alternative minimum tax, or AMT -- an alternative levy originally targeted at the rich, which threatens to encroach on tens of millions of middle-class taxpayers in coming years because it wasn't indexed to inflation. See the bill's main provisions.

The budget agreement for fiscal 2006 shields no more than $70 billion worth of tax cuts from a Senate filibuster. That made for arduous negotiations between Congress' top tax writers -- Senate Finance Committee Chairman Charles Grassley, R-Iowa, and House Ways and Means Committee Chairman Bill Thomas, R-Calif -- as they sought to shoehorn AMT relief and investor tax breaks into a $70 billion, five-year package.

In the end, there was no room for a range of other expiring or expired tax cuts, including the research and development tax credit, tuition relief and cuts for teachers who make out-of-pocket purchases of supplies for their classrooms.

Democrats accused Republicans of ignoring expired tax cuts in favor of extending investor-oriented tax relief that already was set to remain on the books through 2008.

"It is true that this conference report made tough choices. Those choices were tough on teachers, tough on families, tough on businesses. Hopefully their relief will be coming soon," said Sen. Max Baucus of Montana, the senior Democrat on the Senate Finance Committee.

Grassley and Thomas are working on a second package of tax cuts that is expected to include many of the expired tax provisions. That legislation, however, won't be immune to a filibuster in the Senate, and may therefore require a 60-vote super majority for passage.

Three Republicans -- Maine's Olympia Snowe, Ohio's George Voinovich and Rhode Island's Lincoln Chafee -- voted against the bill. Three Democrats -- Mark Pryor of Arkansas, Bill Nelson of Florida and Ben Nelson of Nebraska -- voted in favor. See how they voted.

The lower rate for capital gains and dividends was the centerpiece of the Bush's 2003 tax cut. When the rate expires, most capital gains would be taxed at a 20% rate, while corporate dividends would be taxed at personal income-tax rates, which top out at 35%.

Democrats have emphasized an analysis of the package by the Brookings Institution-Urban Institute Tax Policy Center, which estimated that the lower rates on dividends and capital gains would provide an average tax cut of $20, while those earning more than $1 million would receive a cut of nearly $42,000.

But Republicans, the securities industry and other business groups have argued that lower rates are crucial to capital formation, job creation and increased savings.

"This legislation, which we have strongly supported, will benefit the millions of shareholders who are striving to build savings for retirement, college and other long-term financial needs," said Paul Schott Stevens, president of the Investment Company Institute, a trade group that represents the mutual-fund industry.

"This tax relief package will help ensure that our economy remains strong by letting more investors, small businesses and individuals keep more of their own hard-earned dollars," said U.S. Chamber of Commerce President Tom Donohue.

To keep the net size of the package to less than $70 billion, negotiators included a number of revenue-raising measures. These include a controversial provision that will allow persons earning more than $100,000 to convert traditional investment-retirement accounts into Roth IRAs.

That's expected to provide a short-term revenue boost because money moved out of traditional IRAs into Roth IRAs is taxed up front. (Account holders would be allowed to pay taxes on the conversion in equal installments in 2011 and 2012.) Congress' Joint Tax Committee estimates the change will boost revenues by $6.432 billion over the next decade.

But critics say the measure will hurt the budget over the longer term. That's partly because retirees will be withdrawing Roth IRA funds that have grown tax-free. The Treasury Department can expect to see lower revenues as a result of the change beginning in 2014, and will see receipts reduced by more than $14 billion over the long term, according to a paper released Thursday by Tax Policy Center Director Leonard E. Burman.

Grassley defended the provision on the floor, and accused Democrats of criticizing it for partisan reason. He said that the measure was similar to a Democratic-supported measure introduced in 1991.

"This is a provision that means all Americans have access to the same retirement plans. This is a provision that brings in real revenue to the federal government. This is a provision that will increase tax compliance in an area in which there is room for improvement," Grassley added.