article: 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.
summary: 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."