The bill approves a general Pentagon budget of $496 billion plus $64 billion for US wars abroad.
The measure also authorizes the training and equipping of moderate Syrian rebel fighters for two years.
The bill had already been passed by the House and has now been sent to President Barack Obama to sign into law.
ISIS controls large areas of Syria and Iraq, imposing a rigid version of Sunni Islam and persecuting or killing non-believers.
The US-led coalition has launched more than 600 air strikes against IS militant targets in Iraq since the campaign began on August 8.
The US, with Bahrain, Jordan, Qatar, Saudi Arabia and the United Arab Emirates, has also carried out almost 500 attacks on IS in neighboring Syria since September 23.
Until now, US operations against ISIS had been funded from the existing Pentagon budget.
The new bill, which was passed by 89 votes to 11, approves $3.4 billion for the direct deployment of US forces against IS, and a further $1.6 billion for training Iraqi Kurdish forces for two years.
Democrat Senator Carl Levin said that US air power had “changed the momentum on the ground” but added that IS “cannot be defeated without an opposing force to take the fight to it”.
The National Defense Authorization Act (NDAA) had been the subject of cross-party talks for several months.
The bill rejected President Barack Obama’s request to approve the closure of the US military prison in Guantanamo Bay.
It also extended a ban on transferring inmates from the prison to the US.
The bill protected for another year the fleet of aging A-10 “Warthog” ground-support aircraft, whose retirement had been proposed.
A 1% pay rises for military personnel was also agreed.
Senate Majority Leader Harry Reid lauded the bill, saying “it enhances our efforts to keep our warfighters safe on the battlefield, and it authorizes the resources needed to responsibly conclude our combat mission in Afghanistan”.
The bill also requires the provision of annual mental health screenings for military personnel.
-Dq4cJKQ-kwGeorgia’s outgoing president Salome Zourabichvili refused to step down on December 29, saying she was…
The bald eagle has been officially declared the national bird of the United States, after…
Dozens of passengers have survived a crash involving a plane carrying 69 people in Kazakhstan,…
Millions of Americans are bracing for difficult weather conditions during the Christmas holiday, with storms…
The US House Ethics Committee has voted to release its report on former Republican Representative…
ABC News has agreed to pay $15 million to President-elect Donald Trump to settle a…