The borough already owes Tasca more than $300,000 under a judge's March order that she be reinstated.
On Thursday, a council majority agreed on an undisclosed settlement amount, to be paid through insurance and municipal funds.
A trial could follow if Tasca, who's back on the job, doesn't agree to the proposed deal.
The council fired Tasca in 2012 following a pair of on-duty incidents more than a year earlier.
Superior Court Judge Rachelle Harz ruled earlier this year invalidated the firing, saying that then-Mayor Pat Hale and then-Councilman Tito Jackson should have recused themselves because of conflicts of interest.
Tasca became the borough's first female police officer in 2001.
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