House-Senate conferees reached final agreement early last night on the tax cut bill proposed by President Carter to pep up the economy, after killing a $1.4 billion business tax break.

The bill includes a change in the standard deduction that would slash taxes an average of $111 a year for about 46 million taxpayers, two-thirds of the total.

The bill had been held up in conference by a clash over Senate provisions granting a $30 million annual drilling credit to independent oil producers, the $1.4 billion increase in the investment tax credit from 10 to 12 percent, and several other tax breaks opposed by the Treasury.

The Senate conferees agreed to drop the increase in the investment credit from the bill after House Ways and Means Committee Chairman Al Ullman (D-Ore.) warned that the House would not accept it.

The $30 million annual drilling credit was limited to one year, 1977, after Assistant Treasury Secretary Laurence N. Woodworth said the administration did not want it in this bill. Carter proposed such a credit, but as part of his energy package.

A compromise was reached on a special jobs tax credit that was in both bills in differing forms. Under this agreement, an employer who hires additional workers after allowing for a "normal" 2 per cent growth in his work force would get a tax credit or reduction in taxes otherwise owed of up to $2,100 per employee. But he would lose a deduction for some of the wages paid this employee, so his net tax gain would be somewhat smaller.

Woodworth declined to predict whether the President would sign the bill, but said. "There are things in there we don't like, but I think we got rid of most of the problems we were concerned about."

The tax reduction in the bill was estimated at $2.8 billion in fiscal 1977, $17.7 billion in fiscal 1978, which starts next Oct. 1, and $1.37 billion in fiscal 1979.

In other actions, the conferees:

Dropped from the final bill the $50-per-person tax rebate, which President Carter abandoned three weeks ago on grounds that it's no longer needed to spur the economy.

Agreed on a permanent standard tax deduction - for those who don't itemize on their federal tax return - of $2,200 for single persons and $3,200 for a married couple filing jointly. The present deductions range from $1,700 to $2,400 for a single person and from $2,100 to $2,800 for a couple.

Most taxpayers will benefit from the change, but about 2.1 million single persons earning $13,750 a year or more will pay about $52 a year more in taxes, since they could have received up to $2,400 under the old system in deductions. Effective Jan. 1, 1977. Net tax reduction from this provision will range from $5 billion to $5.5 billion a year.

Provided that reductions in withholding from weekly paychecks to reflect the new, larger standard deduction will start June 1.

Dropped a Senate provision allowing about 3.5 million "heads of households" (chiefly divorced persons) to claim the new $3,200 deduction. They will be treated as single taxpayers and will only get the $2,200 standard deduction.

Approved provisions in both bills simplifying tax forms so that about 96 per cent of all taxpayers will be able to compute taxes (including deductions, credits and exemptions) from a single tax table.

Continued for one year, through the end of 1978, the "general" tax credit for all taxpayers of $35 per person or 2 per cent of the first $9,000 of taxable income.

Continued for one year, to the end of 1978, the 10 per cent "earned income credit" paid to families with children and with salary under $4,000. Dropped was a House provision to permit the credit for persons who get more than half their income from welfare.

Continued for one year, to the end of 1978, existing 1975 corporate cuts, which tax the first $25,000 of corporate income at 20 per cent, the next $25,000 at 22 per cent and everything above that at 48 per cent.

Before the vote, Ullman said, "I fear that we would have some real problems on the House floor if we brought the investment tax credit back." The credit would allow a business to deduct from its tax bill 12 per cent of what it spends in 1977-78 on new capital investment. The 2 per cent increase over the current 10 per cent rate means a loss of Treasury revenues of $1.4 billion a year. It is designed to get large, capital-intensive businesses to invest more and modernize their equipment.

In other decisions yesterday, the conferees agreed to a one-year delay in reducing deductions for sick pay and overseas salaries, and agreed to a tax allowance when a home is used for the business of providing day care services to children and the handicapped, to continue special deductions for travel expenses for state legislators and to a new and easier system of deduction on gambling winnings by race and dog tracks.

A provision extending the countercyclical special revenue-sharing program for one year, supported by the President and passed by the Senate, will be placed before the house for an up or down vote.