A US congressional panel has reached a tentative deal on extending a payroll tax cut, ending weeks of uncertainty.
The $150bn (£95.69bn) deal extends the tax cut until the end of 2012.
Both houses of congress are expected to approve the extension – which will affect 160m workers – by the end of the week.
Agreement came after Republicans dropped calls for spending cuts to offset the expense, and Democrats put aside requests for other tax breaks.
The payroll tax sparked an impasse in Congress at the end of 2011.
The new deal is expected to provide workers with an extra $40 every two months.
The joint House-Senate panel has also agreed to extend unemployment benefits as part of the deal.
“We have reached an agreement and we’re moving forward,” said Republican Representative Dave Camp, who headed the negotiating committee.
Mr Camp said there were some technical details outstanding which would be sorted out by staff aides.
Extending the cut, which was originally passed in 2010, was part of a wide-ranging jobs plan launched by President Barack Obama in September 2011.
But the Republicans had opposed the plan as it had wanted spending cuts to pay for the tax reduction in order to avoid an increase in the federal debt.
Republicans had wanted to reduce the extension of unemployment benefits from 99 weeks to 59 weeks. The White House wanted a 79-week extension as a compromise – but the deal agreed is 73 weeks in states with the highest numbers of unemployed people.
Although particularly states where unemployment is a key issue – such as Rhode Island and Nevada – will actually see more generous measures than under current law.
The Republicans also dropped a condition that potential recipients of unemployment benefits must be drug-tested first.
Another condition which was dropped was the requirement for those on low incomes who claimed child tax credit to possess social security numbers if they wanted government cheques.
However, under the terms of the tentative deal, there would still be a 2% point cut in the payroll tax which pays for federal social security pensions.
It would also renew benefits worth an average of $300 a week for the long term unemployed.
