US President Barack Obama has said it appears a deal on the "fiscal cliff" is within sight.
However, the US looks on track to tumble over the "cliff" at midnight EST, at least for a day as politicians remained reluctant to back last-minute efforts by Senate leaders to avert tax increases and spending cuts.
Earlier, Mr Obama said: "Today it appears that an agreement to prevent this New Year's tax hike is within sight, but it is not done".
"There are still issues left to resolve, but we're hopeful that Congress can get it done, but it's not done."
The House of Representatives may not vote on any Senate-passed deal until after tonight's midnight EST deadline (5am Irish time Tuesday), a Republican leadership aide said.
The aide said any negative fallout from delaying a vote until tomorrow would be minimal since financial markets would be closed.
The aide noted, "We still don't have a bill from the Senate and we want members to read it before they vote on it."
The reportedly emerging deal would raise $600bn in revenue over the next ten years.
It would achieve this by increasing tax rates for individuals making more than $400,000 and households making above $450,000 annually, according to a source familiar with the talks.
The deal would also delay a series of automatic government spending cuts, known as the "sequester," though a sticking point remains on how long that delay would last.
The White House is pressing for it to be delayed a full fiscal year and to include offsets made up of a mix of spending cuts and revenue, the source said.
The deal would permanently extend middle-class tax cuts for 114m households and includes a permanent fix for the so-called "alternative minimum tax."
It would extend unemployment insurance for 2m people for one year.
The deal would raise the estate tax for estates worth $10m per couple or more to 40% from 35%.
The agreement would return capital gains tax rates for individuals making $400,000 a year and couples making $450,000 a year to what they were under President Bill Clinton.
Including a 3.8% tax from Mr Obama's 2010 healthcare law, dividends and capital gains would be taxed at a rate of 23.8%.
The deal also prevents a 27% cut to reimbursements for doctors who see Medicare patients, known as the "doc fix," and does not include cuts from Mr Obama's healthcare law to do so, according to the source.
Mr Obama said the agreement being worked out with Republican leaders in Congress would not include a long-term solution to the government's debt problem.
"My preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain, whatever you want to call it that solves our deficit problems in a balanced and responsible way," he said.
"But with this Congress that was obviously a little too much to hope for at this time. Maybe we can do it in stages. We're going to solve this problem instead in several steps."
Mr Obama stressed that a deal over those spending cuts had to include revenue.
"Any agreement we have to deal with these automatic spending cuts that are being threatened for next month, those also have to be balanced," he said.
"That means that revenues have to be part of the equation in turning off the sequester, in eliminating these automatic spending cuts, as well as spending cuts."
The same would be true for any future deficit-cutting agreement, he said.
As he often stresses, Mr Obama said deficit reduction would have to follow the principle of not hurting senior citizens, students, or middle class families.
"If we're going to be serious about deficit reduction and debt reduction, then it's going to have to be a matter of shared sacrifice, at least as long as I'm president, and I'm going to be president for the next four years," he said.
US stocks closed out the last trading day of the year on a high note after comments from Mr Obama and Senate Republican leader Mitch McConnell pointed to a near resolution of the "fiscal cliff" negotiations.
The Dow Jones industrial average gained 166.03 points, or 1.28%, to end unofficially at 13,104.14.
The Standard & Poor's 500 Index rose 23.76 points, or 1.69%, to 1,426.19. The Nasdaq Composite Index climbed 59.20 points, or 2.00%, to 3,019.51.
For 2012, the Dow rose 7.3%, while the S&P 500 climbed 13.4% and the Nasdaq jumped 15.9%.