A tentative "fiscal cliff" deal is emerging as Democrats and Republicans in the U.S. Senate narrowed their differences, sources familiar with the talks said on Monday.

Top U.S. Senate Republican Mitch McConnell said on the Senate floor that the two sides are very close to a deal. McConnell said his talks with the Vice President Biden is successful and an agreement has been reached on all the tax issues. But the talks will continue on how to deal with a series of spending cuts known as "sequester."

The potential fixing plan would call for tax rates being raised on households making over 450,000 dollars and individuals earning over 400,000 dollars a year, the local media reported. The unemployment benefits for about 2 million Americans would be extended for a year.

Working against a midnight deadline, lawmakers are trying to craft a deal that both the Senate and House would approve to avert the "fiscal cliff" -- massive tax hikes and broad spending cuts due on Tuesday.

U.S. President Barack Obama said on Monday at the White House that an agreement to avert the "fiscal cliff" appears to be " within sight," but "not done" yet.

"There are still issues left to resolve, but we're hopeful that Congress can get it done," Obama said.