By Richard Rubin 

WASHINGTON--U. S. lawmakers are nearing a deal to make several lapsed and expiring tax breaks permanent, seeking a bipartisan accord that would provide certainty to households and businesses but also widen the budget deficit by more than $500 billion over the next decade.

A deal hasn't been announced, and the talks could still collapse or change significantly in the final days before Congress adjourns for the year.

"I think we'll get it done," Orrin Hatch (R., Utah), chairman of the Senate Finance Committee, told reporters on Monday. "There's no guarantee we're going to get it. I'm working hard to do it and we'll see what happens. We're open. We know that there's some things that I don't like that we're going to have to take."

Any potential tax agreement could provide victories for congressional Republicans and their business allies as well as Democrats and the Obama administration. It would also face likely criticism from the wings of both parties and from deficit hawks.

Republicans could win permanent extensions of the research and development tax credit, the deductibility of state sales taxes and a handful of other business tax breaks that expired at the end of 2014. The GOP would also get an extension, though perhaps not permanent, of bonus depreciation, a tax break for capital investment that's been in place in some form since 2008. Hatch said the depreciation issue is being "heavily fought."

Democrats would get permanent extensions of tax credits for low-income families that are expiring at the end of 2017. They could also get an extension of the solar energy tax credit. The wind energy credit could also get extended and would be phased out, Hatch said.

Delays of two pieces of Obamacare--the medical device tax and the Cadillac tax on high-cost health insurance--could also be included, Hatch said. Those taxes have bipartisan opposition.

A sticking point emerged over adjusting the child-tax credit and the American Opportunity Tax Credit, which helps cover college expenses, for inflation. Republicans oppose adjusting the tax credits for inflation, but Democrats insist that the credits increase along with inflation.

"It's critically important to us," said Rep. Steve Israel (D., N.Y.) after leaving a Monday evening House Democratic meeting. "Given what the Republicans are trying to load into this bill, if they can't at least give us that it's going to be very difficult" to win Democratic support for the broader tax package, he said

The child tax credit has been set at a $1,000-per-child maximum since 2003, and the tuition credit has been capped at $2,500 since 2009. Many other parameters of the tax code are adjusted for inflation.

The tax talks add another layer of complexity to what is likely to be a busy December in Congress. Lawmakers are also trying to reach final agreements on a long-term highway bill and set agency budgets for fiscal 2016.

"We'll get this done before the end of the year," House Majority Leader Kevin McCarthy (R., Calif.) said on Monday. "I would love to see some permanency. We'll see what mix we can get."

There are dozens of other breaks that lapsed at the end of 2014 and many of those might only get extensions through 2016. Some enjoy a broad bipartisan consensus, such as the ability to make direct charitable contributions from individual retirement accounts. Others, such as tax credits for renewable energy and faster write-offs for investments in motor sports tracks, divide lawmakers.

There are many potential pitfalls in the complex and fragile negotiations. The budgetary impact of the plan may scare away some votes, but the total price tag will be misleading. In many cases, Congress was already adding to the deficit in smaller chunks with periodic extensions of widely supported breaks, and permanent extensions just combine what would otherwise be several laws over the next decade into one.

"Everybody has to look at it and say, let's do the art of the doable," Hatch said.

Also, the administration has been resisting extensions of bonus depreciation. Republicans have been seeking changes to the earned income tax credit, to reduce fraud, and to the child tax credit, in a bid to prevent payments to illegal immigrants.

"We'll find some resolution of that," Hatch said. "We know the EITC has fraud in it. On the other hand, it's an important program that requires work."

Kristina Peterson and Siobhan Hughes contributed to this article.

Write to Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

November 30, 2015 20:49 ET (01:49 GMT)