Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking member Sen. Orrin Hatch, R-Utah, announced the deal shortly after midnight, Politico reported, showing that the two parties can still reach a deal.
The deal extends longstanding provisions of the so-called tax extenders package, such as the research and development tax credit, which has been in place off and on for years.
The report said committee leaders agreed to let 25 percent of current tax breaks expire in order to satisfy Republicans, who said the overall cost had to be kept in check.
But Politico said the package is a win for business lobbying interests that try to persuade Congress each year to keep their special perks in the tax code.
House Republicans have scheduled a vote on extending the 2001 and 2003 Bush-era tax cuts, Politico said. Democrats do not want to extend the tax cut for top earners. Republican House tax writers weren't involved in the negotiations on the business tax package, Politico said.
"This [business tax package] effort has proven that legislating can still be done if both sides work together," Baucus said. Hatch called the deal the "first step towards the ultimate goal of comprehensive tax reform."
The committee is scheduled to hold a markup of the agreement Thursday.