text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Public Pension Parity Act of 1995''.
  
  SEC. 2. EXCLUSION FOR CERTAIN PENSIONS AND ANNUITIES UNDER PUBLIC 
                RETIREMENT SYSTEMS.
  
      (a) In General.--Part III of subchapter B of chapter 1 of the 
  Internal Revenue Code of 1986 (relating to items specifically excluded 
  from income) is amended by redesignating section 137 as section 138 and 
  by inserting after section 136 the following new section:
  
  ``SEC. 137. CERTAIN PENSIONS AND ANNUITIES UNDER PUBLIC RETIREMENT 
                SYSTEMS.
  
      ``(a) General Rule.--Gross income does not include any amount 
  (otherwise includable in gross income) received by an individual as a 
  qualified governmental pension.
      ``(b) Limitations.--
              ``(1) Dollar limitation.--The aggregate amount excluded 
          under subsection (a) for the taxable year shall not exceed--
                      ``(A) the maximum excludable social security 
                  benefits of the taxpayer for such year, reduced by
                      ``(B) the social security benefits (within the 
                  meaning of section 86(d)) received by the taxpayer 
                  during such year which were excluded from gross income.
              ``(2) Service requirement.--Subsection (a) shall not apply 
          to any qualified governmental pension received by the taxpayer 
          during the taxable year unless the taxpayer (or the spouse or 
          former spouse of the taxpayer) performed the service giving 
          rise to such pension.
      ``(c) Definitions.--For purposes of this section:
              ``(1) Qualified governmental pension.--The term `qualified 
          governmental pension' means any pension or annuity received 
          under a public retirement system to the extent such pension or 
          annuity is not attributable to service--
                      ``(A) which constitutes employment for purposes of 
                  chapter 21 (relating to the Federal Insurance 
                  Contributions Act), or
                      ``(B) which is covered by an agreement made 
                  pursuant to section 218 of the Social Security Act.
              ``(2) Maximum excludable social security benefits.--The 
          term `maximum excludable social security benefits' means an 
          amount equal to so much of the applicable maximum benefit 
          amount for the taxpayer for the taxable year which would be 
          excluded from gross income if such benefit amount were treated 
          as social security benefits (within the meaning of section 
          86(d)) received during the taxable year.
              ``(3) Applicable maximum benefit amount.--The term 
          `applicable maximum benefit amount' means--
                      ``(A) in the case of an unmarried individual, the 
                  maximum individual social security benefit,
                      ``(B) in the case of a joint return, 150 percent of 
                  the maximum individual social security benefit, or
                      ``(C) in the case of a married individual filing a 
                  separate return, 75 percent of the maximum individual 
                  social security benefit.
          For purposes of the preceding sentence, marital status shall be 
          determined under section 7703.
              ``(4) Maximum individual social security benefit.--
                      ``(A) In general.--The term `maximum individual 
                  social security benefit' means, with respect to any 
                  taxable year, the maximum total amount (as certified by 
                  the Commissioner of Social Security to the Secretary) 
                  which could be paid for all months in the calendar year 
                  ending in the taxable year as old-age insurance 
                  benefits under section 202(a) of the Social Security 
                  Act (without regard to any reduction, deduction, or 
                  offset under section 202(k) or section 203 of such Act) 
                  to any individual who attained retirement age (as 
                  defined in section 216(l)), and filed application for 
                  such benefits, on the first day of such calendar year.
                      ``(B) Part years.--In the case of an individual who 
                  receives a qualified governmental pension with respect 
                  to a period of less than a full taxable year, the 
                  maximum individual social security benefit for such 
                  individual for such year shall be reduced as provided 
                  in regulations prescribed by the Secretary to properly 
                  correspond to such period.
              ``(5) Public retirement system.--The term `public 
          retirement system' means any pension, annuity, retirement, or 
          similar fund or system established by the United States, a 
          State, a possession of the United States, any political 
          subdivision of any of the foregoing, or the District of 
          Columbia.''
      (b) Technical Amendment.--Subparagraph (A) of section 86(b)(2) of 
  such Code (defining modified adjusted gross income) is amended by 
  inserting ``137,'' before ``911''.
      (c) Clerical Amendment.--The table of sections for part III of 
  subchapter B of chapter 1 of such Code (relating to items specifically 
  excluded from income) is amended by redesignating the item relating to 
  section 137 as section 138 and by inserting after the item relating to 
  section 136 the following new item:
  
                                ``Sec. 137. Certain pensions and 
                                          annuities under public 
                                          retirement systems.''
      (d) Effective Date.--The amendments made by this Act shall apply to 
  taxable years beginning after the date of the enactment of this Act.
target: Public Pension Parity Act of 1995 - Amends the Internal Revenue Code to:  (1) exclude from gross income any amount received by an individual as a qualified governmental pension which does not exceed the maximum excludable social security benefits of the taxpayer for such year reduced by the social security benefits received during such year which were excluded from gross income; and (2)  prohibit applying clause (1) to any qualified governmental pension received during the taxable year unless the taxpayer (or the spouse or former spouse of the taxpayer) performed the service giving rise to such pension. Defines the term "maximum excludable social security benefits."
feat_title: Public Pension Parity Act of 1995