President Barack Obama gestures as he speaks about the fiscal cliff, Monday, Dec. 31, 2012, in the South Court Auditorium at the White House in Washington. The president said it appears that an agreement to avoid the fiscal cliff is "in sight," but says it's not yet complete and work continues. / AP
Updated 4:30 p.m. ET
Most of the world is counting down to a midnight New Year's celebration while Congress continues to watch the clock and count down to another deadline, despite the efforts of lawmakers to avert the "fiscal cliff."
Those efforts are inching closer to the midnight deadline, but leaders from both parties indicate that a deal is within reach.
President Obama took to the stage with middle-class taxpayers standing behind him this afternoon to announce that Congress is making "progress" and that "it appears an agreement...is in sight."
Senate Minority Leader Mitch McConnell, R-Ky., described the status of the talks even more positively saying he and his main negotiating partner, Vice President Joe Biden, are "very, very close to an agreement."
While he didn't provide details, McConnell said on the Senate floor, "We've reached an agreement on all of the tax issues."
Multiple congressional sources tell CBS News that the two sides have agreed on a permanent income threshold for the expiration of the Bush-era tax cuts for the wealthiest Americans: $400,000 for individuals and $450,000 for families. For weeks, Democrats have pushed for letting the cuts expire for those making over $200,000 and families making over $250,000 while Republicans have wanted to renew the cuts for all Americans, including the wealthiest.
Additionally, agreement has been reached on the estate tax, which was set to increase from 35 percent to 55 percent in 2013. Instead, the compromise sets the new rate at 40 percent with the first $5 million exempt from being taxed.
Other likely components of the deal include an increase in capital gains and dividend tax rates, which would increase from 15 to 20 percent. There would also be an extension of the Earned Income Child Tax Credit, a permanent fix to the Alternative Minimum Tax and a one-year extension of tax credits for renewable energy development. And doctors would be shielded from a massive reimbursement gab for treating Medicare patients.
The entire tax deal would raise about $600 billion, aides said.
Also agreed to is a major sticking point for Democrats: an extension of unemployment benefits for two million Americans whose benefits expired over the weekend.
With negotiations still ongoing and the timing of a vote on a "cliff" deal still in flux, the House announced this afternoon that it is not likely to vote on any deal tonight.
What this means is that although the country will technically go over the "cliff" at midnight, the significant progress in the negotiations signals any detrimental impact from the "cliff" will be avoided, even if a vote happens after midnight - that is, unless a deal is eventually voted down in Congress or the talks collapse altogether before a vote.
Vice President Joe Biden and McConnell have been the key negotiators over the past 24 hours and the movement on taxes represents a huge step forward on this last day of talks before the cliff.
What has not been agreed upon is what to do with automatic budget cuts, known as the sequester. The $110 billion of cuts to defense and non-defense government programs are set to go into place in the new year. The president said he had hoped any deal would be more comprehensive and address the sequester and the deficit in "a balanced way."
Even though deficit reduction was the Republicans' top priority, the president used the possible exclusion of the sequester to take a swipe at Congress. "[W]ith this Congress that was obviously too much to hope for." He said.
Some congressional Republicans and aides didn't take very well the president's condescending remarks.
"So....I'm confused....does POTUS want a deal or not? Because all those jabs at Congress certainly sounded like a smack in the face to me," Erica Elliot, communications director for House Majority Whip Kevin McCarthy, wrote via Twitter.
Emphasizing the importance of deficit reduction to his fellow Republicans, McConnell urged his colleagues not to hold up a deal because the sequester might not be addressed today. He called the tax portion of the "fiscal cliff" the most important component as taxes are set to rise on every wage-earning American tomorrow. "Let's take what's been agreed to and get moving," he said.