Taxpayer Relief Act of 1997

The Taxpayer Relief Act of 1997 (Pub.L. 105–34, H.R. 2014, 111 Stat. 787, enacted August 5, 1997) reduced several federal taxes in the United States.

This article is part of a series on
Taxation in the United States
 United States portal

Starting in 1998, a $400 tax credit for each child under age 17 was introduced, which was increased to $500 in 1999. This credit was phased out for high-income families.

The top marginal long term capital gains rate fell from 28% to 20%, subject to certain phase-in rules. The 15% bracket was lowered to 10%.

Roth IRAs were established, permanently exempting these retirement accounts from capital gains taxes.

The act permanently exempted from taxation the capital gains on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. This exemption applies to residences the taxpayer(s) lived in for at least two years over the last five. Taxpayers can only claim the exemption once every two years.[1]

The $600,000 estate tax exemption was to increase gradually to $1 million by the year 2006. As inherited assets are automatically revalued to their current or "stepped-up" basis, any capital gains are permanently exempted from taxation.

Family farms and small businesses could qualify for an exemption of $1.3 million, effective 1998. Starting in 1999, the $10,000 annual gift tax exclusion was to be corrected for inflation.

The act also provided tax exemptions for retirement accounts as well as education savings in the Hope Scholarship Credit and Lifetime Learning Credits. Some expiring business tax provisions were extended.

Legislative history

This was the first law devoted solely to tax cuts that Congress enacted using the fast-track budget reconciliation process.

Vote by Party Yea Nay
Republicans 225 99.6% 1 0.4%
Democrats 164 80.0% 41 20.0%
Independents 0 0.0% 1 100%
Total 389 90.0% 43 10.0%
Not voting 2 1

Source: Roll call vote 350, via Clerk.House.gov

Final Senate vote, July 30, 1997
Vote by Party Yea Nay
Republicans 55 100% 0 0.0%
Democrats 37 82.2% 8 17.8%
Total 92 92.0% 8 8.0%

Source: Roll call vote 160, via Senate.gov

It was signed into law by President Bill Clinton on August 5, 1997, along with the Balanced Budget Act of 1997.

gollark: Just rename yourself to Zoidtron and hope nobody notices!(Note: do not actually do this)
gollark: Actually doing non-stupid things?
gollark: Yes, which is bad.
gollark: Will we need a metacornfield?
gollark: ♑ 🌽 🍿 🦄

References
  1. U.S. Law. "26 USC § 121". Cornell Legal Information Institute. Retrieved April 1, 2013.
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.