The Taxpayer Relief Act of 1997 introduced broadly beneficial tax cuts.
Family Tax Credits
- Child Tax Credit: A new credit of $400 per child (rising to $500 in 1999) for children under 17.
Education Incentives
- Hope Credit: Up to $1,500 credit for the first two years of college.
- Lifetime Learning Credit: A 20% credit on up to $5,000 of tuition for other education.
- Student Loan Interest: A new "above-the-line" deduction for student loan interest.
- Roth IRAs: Introduction of the Roth IRA, where contributions are non-deductible but earnings are tax-free.
Capital Gains and Housing
- Capital Gains Rate: The top rate for long-term capital gains dropped from 28% to 20% (and 10% for lower brackets).
- Home Sale Exclusion: You can now exclude up to $500,000 (joint) or $250,000 (single) of gain on the sale of your primary residence, replacing the old "rollover" rules and one-time exclusion.