President Bush’s tax advisory panel agreed to recommend limiting tax breaks for homeowners and employer provided health-care benefits to help pay for repealing the alternative minimum tax.

The panel, which met in Washington yesterday, agreed the current $1 million cap on deductible mortgage interest should be reduced to about $350,000 and that the deduction should yield no more than a 25% tax savings, down from a top savings now of about 35%.

The panel also said it would probably recommend capping tax deductions for employer-provided health-care plans. Current law allows employers to deduct the value of premiums paid on behalf of their workers without the benefit being considered taxable income to the employee. The panel discussed placing the cap at the maximum amount the federal government pays in premiums for its workers, currently about $11,000.

“These are the things we’re looking at,” the vice chairman of the panel, John Breaux, said. Mr. Breaux is a Democrat and former senator from Louisiana. “We have a concept. We know where to go. We just don’t have the details.”

The two proposals, which Mr. Breaux called “tough choices” would raise “a generous amount” of taxes to help offset the $1.3 trillion cost of repealing the alternative minimum tax, he said. The minimum tax, imposed in 1969 to ensure that 200 wealthy families didn’t escape tax with excess deductions, is now forcing millions of middle-income families to pay higher taxes because it was never indexed for inflation.

The details of the proposals will be ironed out in the next week, the chairman of the panel, Connie Mack, said.

Mr. Mack said that proposal would be discussed at the panel’s final meeting on October 18.The panel is due to make its final recommendations to the Treasury Department by November 1. Its report will serve as a blueprint for a comprehensive proposal by Mr. Bush to overhaul the tax code as early as next year.