Extending tax cuts for Americans who earn less than \$250,000 a year - but not for incomes above that - will remove "half of the fiscal cliff", Barack Obama has said.
In his first news conference since being re-elected, the US president reiterated his desire to see Republicans and Democrats give the middle-class security by passing a law preventing tax increases on the first \$250,000 (£158,000) of all Americans' incomes.
The alternative of inaction by Congress "doesn't make sense", the president said, and would only push the country over the so-called "fiscal cliff" of automatic tax increases.
Last week, Republican Speaker of the House John Boehner voiced his firm opposition to tax increases on the top 2% of earners.
The president said: "I'm open to compromise and I'm open to new ideas, and I've been encouraged over the past week to hear Republican after Republican agree on the need for more revenue from the wealthiest Americans as part of our arithmetic, if we're going to be serious about reducing the deficit.
"We should not hold the middle class hostage while we debate tax cuts for the wealthy."
Mr Obama said he would not extend Bush-era tax cuts to the wealthiest 2% of Americans earning more than \$250,000 - a step that he said would cost the country \$2trn (£1.3trn).
He also noted the hard work ahead to simplify the tax code, close loopholes and reform entitlement programmes.
On immigration reform, the president said he expected a bill would be introduced by Congress "very soon after" his January 21 inauguration, and praised the increasingly bipartisan support for such legislation.
When questioned on the future of negotiations with Iran, the president said he believes there is still a window of time for diplomatic negotiations to prevent Iran from obtaining a nuclear weapon.
Mr Obama pushed back against Republican senators who aim to prevent UN ambassador Susan Rice's confirmation, if she is tapped to replace Secretary of State Hillary Clinton.
Senator John McCain had said he would do everything he could to block Ms Rice's nomination - and Senator Lindsey Graham had said he did not trust Ms Rice after comments she made in the wake of the September 11 attack on Benghazi, Libya.
The president said, if Mr McCain wants to go after someone, he should challenge the president, not Ms Rice.