The tax law makes more than 800 changes to the already massive tax code, changes that affect nearly everyone. The effective dates for the changes vary. Some provisions are retroactive, some take effect immediately, and many go into effect in 1998 or later. Many of the new provisions are phased out at differing income levels.

Individuals will get a variety of new tax breaks. The law provides a tax credit for children under 17, creates college tuition tax credits and education IRAs, and allows penalty-free withdrawals from individual retirement accounts for qualified education expenses and first home purchases. Capital gains taxes are cut, and the rules for taxing home sales are completely revised. Fewer estates will be subject to taxes, and special estate tax breaks are provided for qualifying small businesses and family farms.

The law exempts from taxation profits on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. To qualify, sellers must have owned and used the home as their principal residence for at least two of the last five years before the sale. Effective for sales after May 6, 1997, this new provision replaces the prior rollover provision on home sales and the $125,000 exclusion of gain for those 55 and over. There was no change in the rule that prohibits taxpayers from deducting losses on home sales.

This new $500,000 ($250,000 for singles) exclusion will not benefit those whose profit exceeds the limit.

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