In his weekly radio and internet address, President Obama said the typical American family would gain by at least $65 (£46) a month.
He also pledged to cut America's trillion-dollar deficit.
The tax cuts announced on Saturday are part of a $787bn stimulus plan that Mr Obama signed into law this week.
The plan, aimed at reviving the US economy amid a global economic crisis, is split into 36% for tax cuts and 64% percent allocated for spending on social programmes.
Mr Obama said the US treasury had already begun directing employers to reduce the amount of taxes claimed from pay cheques.
The savings will reach 95% of American families, he said.
"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," the president said.
Challenges ahead
Mr Obama said work must now start on trying to stabilise the banking system, stem the fall in house prices and get budget deficits under control.
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He announced that he would call a fiscal summit on Monday to discuss an inherited deficit of $1.3tn.
An unnamed US official was later quoted as saying Mr Obama intended to cut the deficit in half by the end of his first term.
This would be done by scaling back on the war in Iraq, increasing taxes on those earning more than $250,000 a year and making government more efficient, the official said.
Mr Obama said he would address the nation about his priorities on Tuesday before issuing a budget on Thursday.
"I'll release a budget that's sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don't, and restoring fiscal discipline," he said.
However, he also warned of the challenges ahead.
"As important as it was that I was able to sign this plan into law, it is only a first step on the road to economic recovery.
"None of this will be easy. The road ahead will be long and full of hazards," he added.
"But I am confident that we, as a people, have the strength and wisdom to carry out this strategy and overcome this crisis."
The stimulus plan, which was approved by Congress just over a week ago, aims to save or create 3.5 million jobs, boost consumer spending and rebuild infrastructure.
Over the past week, Mr Obama has also announced measures to assist families facing foreclosures, and those struggling to meet mortgage payments.
But Republicans, only three of whom voted for the stimulus package in Congress despite calls by Mr Obama for bipartisan support, have said the new tax cuts are insufficient.
They have also complained that the president's spending plans will leave the US economy saddled with debt for years to come.
"We can't borrow and spend our way back to prosperity," Republican Dave Camp said in his party's weekly address.
"If he [Mr Obama] is serious about dealing with the tough issues and getting spending under control, his budget will show it."
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