House Republican leaders say they will support extending the federal payroll tax cut through the end of the year.
Leaders of the GOP backed off their original demand that the tax cut be accompanied by spending cuts to pay for it.
The 2 percent payroll tax cut is expected to add $100 billion to the nation's $15 trillion-plus debt bill.
House Speaker John Boehner, R-Ohio, said he doesn't want to be held responsible for a tax increase on more than 160 million workers.
Negotiations continue over ways to pay for the remaining $50 billion needed to cover the extension of unemployment benefits and medicare reimbursements for doctors.
Democrats were encouraged and said the development could break an impasse over the payroll tax proposal and the other expiring provisions.