The Taylor Force Act was attached to the 2018 Foreign Operations budget in the Senate on Thursday, Haaretz reports.
The move means the legislation is almost certainly assured of being enforced in the United States from next year.
The Taylor Force Act would cut U.S. funding to the Palestinian Authority (PA) until it ends its policy which distributes $300 million to terrorists and their families annually.
The bill is named after Taylor Force, a former United States Army officer who was murdered in a stabbing attack in 2016, while walking along the Jaffa boardwalk.
The Taylor Force Act was approved last month by the Senate Foreign Relations Committee with bipartisan support.
However, original sponsor Sen. Lindsey Graham (R-SC) feared that because of the tight schedule facing the Senate over coming weeks, the legislation would not reach a vote before the entire Senate, ahead of the deadline for legislation to take effect in the next fiscal year.
Graham decided on Thursday to attach the legislation to the foreign operations budget, which was approved by the Senate Committee on Appropriations, according to Haaretz.
A recent report found that more than half of the PA's yearly budget goes to terrorists, with more than $1 billion having been dedicated for such purposes in the last four years alone.
Despite pressure to end the policy of paying the families of terrorists who murdered Jews, PA chairman Mahmoud Abbas reportedly told the United States last month that he has no intention of doing so.
"I do not intend to cease paying salaries to the families of prisoners and martyrs, even if it means I lose my position. I will continue paying their salaries until my dying day," he said.
(Arutz Sheva’s North American desk is keeping you updated until the start of Shabbat in New York. The time posted automatically on all Arutz Sheva articles, however, is Israeli time.)