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The final vote was 63-36.
The bill will now go to President Joe Biden's desk for his signature.
Biden heralded the Senate vote passing the budget agreement as a "big win" for the economy.
Noting the bipartisan nature of the vote, Biden said, "Together, they demonstrated once more that America is a nation that pays its bills and meets its obligations -- and always will be. I want to thank Leader [Chuck] Schumer and Leader [Mitch] McConnell for quickly passing the bill."
"No one gets everything they want in a negotiation, but make no mistake: This bipartisan agreement is a big win for our economy and the American people," the president added.
Biden said he looks forward to signing the bill as soon as possible, and that he will address the American people directly Friday.
Schumer painted the debt limit deal as a broad victory for Democrats late Thursday night during a press conference just after the legislation passed.
"Default was a giant sword hanging over America's head," Schumer said. "But because of the good work of President Biden, as well as Democrats in the House and Democrats in the Senate, we are not defaulting."
Schumer's comments come after an aggressive effort by House Speaker Kevin McCarthy to cast the bill as a GOP victory. But Schumer pointed to the vote margins in the House and Senate, noting that the bill enjoyed more support from Democrats than it did from Republicans in both chambers.
"We got more votes because the bill beat back the worst of the Republican agenda," Schumer said. "This was an exercise in where the American people are at, and they are much closer to where we are than where they are."
The Fiscal Responsibility Act, the product of weeks of contentious negotiation between Biden and McCarthy, will raise the $31.4 trillion debt limit through Jan. 1, 2025, while also implementing some caps on government spending and policy changes.
Republicans are touting its spending cuts while the White House argues it was able to protect major Democratic priorities like Medicare and Social Security, among other Biden-backed initiatives.
The compromise legislation was met with opposition from wings of both parties -- hard-line Republicans and progressive Democrats -- but has now passed both chambers with bipartisan support in the face of the alternative: an unprecedented default on the nation's bills that would've likely cost millions of jobs and triggered a recession.
The House passed the bill on Wednesday in a 314-117 vote, a win for McCarthy in his first major test as speaker.
"I wanted to make history," McCarthy said as he took a victory lap after the bill's passage. "I wanted to do something no other Congress has done, that we would literally turn the ship, that for the first time in quite some time we'd spend less than we spent the year before."
Lawmakers have raced to get the bill across the finish line ahead of Monday, the date Treasury Secretary Janet Yellen has warned the U.S. could run out of money to pay all its bills on time and in full.
The Senate avoided a filibuster and the passage of any amendments to get the bill across the finish line before the weekend.
Overall, the Fiscal Responsibility Act will keep non-defense spending flat in fiscal year 2024 and increase spending by 1% in 2025, which ultimately amounts to a cut in light of inflation, while slightly raising military spending.
It imposes new work requirements for older Americans using the Supplemental Nutrition Assistance Program, or food stamps, and other federal assistance, a key Republican demand, though the Congressional Budget Office estimated it could increase spending and the number of people who qualify for aid. Medicaid and Medicare programs were left untouched.
The legislation also paves the way for a natural gas pipeline from West Virginia to Virginia, claws back some funding for the Internal Revenue Service and ends the three-year pause on federal student loan payments.
According to the CBO, the bill will reduce the deficit by $1.5 trillion over the next decade.
ABC News' Molly Nagle contributed to this report.