As the White House and Congressional Republicans near a deal on sweeping tax legislation, including an extension of the Bush-era tax rates for all income levels, President Obama has agreed to give up the “Making Work Pay” tax credit that was the central tax break for middle and low-income Americans in last year’s economic stimulus bill.

Mr. Obama had been pressing for a one-year extension of the Making Work Pay credit, which provided a tax break of up to $400 for individuals and $800 for couples. But Republicans opposed the idea.

An administration official said that in the emerging deal, the “Making Work Pay” credit would be replaced with a one-year reduction in payroll taxes for workers.

In addition to a two-year extension of the income tax rates enacted under President George W. Bush, the deal includes a one-year extension of jobless aid for the long-term unemployed. Officials said negotiators were also close to an agreement to restore the federal estate tax, which lapsed at the start of this year, with an exemption of up to $5 million per individual, and a maximum rate of 35 percent.

Mr. Obama, on a visit to Winston-Salem, N.C. on Monday, said the two sides were working toward an agreement that would prevent a tax increase at the start of the year when the Bush-era rates are due to expire.

“Right now, Democrats and Republicans in Congress are working through some differences to try to get this done,” Mr. Obama said. “And there are some serious debates that are still taking place. Republicans want to make permanent the tax cuts for the wealthiest Americans. I have argued that we can’t afford it right now. But what I’ve also said is we’ve got to find consensus here, because a middle-class tax hike would be very tough not only on working families. It would also be a drag on our economy at this moment.”

Mr. Obama added, “There’s no reason that ordinary Americans should see their taxes go up next year. We should also extend unemployment insurance for workers who’ve lost their jobs through no fault of their own. That is a priority. And I should mention that’s not only the right thing to do, it’s the smart thing to do because if millions of Americans who aren’t getting unemployment benefits stop spending money, that slows down businesses. That slows down hiring. It slows down our recovery.”