The package now goes to the House of Representatives, which rejected an earlier version of the measure.
The bill, a bipartisan effort to restore confidence in the nation's banking system, passed 74-25 with 40 Democrats, 33 Republicans and independent Joe Lieberman of Connecticut voting for it. The two presidential nominees, Democrat Barack Obama and Republican John McCain, returned from the campaign trail to cast votes for the plan.
Backed by the Bush administration, the measure authorizes the government to buy troubled assets from financial institutions reeling from a record number of home foreclosures.
The House rejected a bailout package two days ago 228-205, as 40 percent of Democrats and about two-thirds of Republicans opposed it. At least a dozen House members would have to switch sides to complete congressional passage and advance the legislation to Bush to be signed into law.
The House plans to take up the measure in two days. It was revised to lure more Republican support.
The measure gives Treasury Secretary Henry Paulson broad power to acquire troubled assets from financial institutions saddled with troubled mortgage-backed securities. The plan also would limit executive compensation and provide oversight of the Treasury secretary's decisions.
The legislation links the rescue plan to a temporary increase in the limit on federal deposit insurance to $250,000 from $100,000.
The Senate also linked the package to a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, a move popular among House Republicans. The provisions include $17 billion in credits for the development of solar, wind and other forms of renewable energy.
The nonpartisan Congressional Budget Office said today that the tax provisions added to the bailout plan would add $119 billion to the government's projected budget deficits over the next five years.
The package would spare 24 million households from a $62 billion alternative-minimum tax that is due to take effect this year.
The legislation would let the Federal Reserve pay interest immediately on reserve balances, giving the central bank another tool to manage the nation's cash supply.
The Senate bill reiterates the U.S. Securities and Exchange Commission's authority to suspend an accounting rule that bankers and other corporate executives blame for exacerbating the global credit crisis.
The so-called fair-value standard requires companies to review assets and report losses if their values decline. Lawmakers, the American Bankers Association and companies including American International Group Inc. have urged the SEC to suspend or ease the rule, saying it forces firms to report deeper losses than needed on assets such as subprime mortgages.
The Senate measure also orders the SEC to study the effect the fair-value requirement has on bank failures and balance sheets.