‘‘(1) the amount of basic pay which would oth-
erwise have been payable to such employee for such 
pay period if such employee’s civilian employment 
with the Government had not been interrupted by 
that service, exceeds (if at all) 
‘‘(2) the amount of pay and allowances which 
(as determined under subsection (d))— 
‘‘(A) is payable to such employee for that 
service; and 
‘‘(B) is allocable to such pay period. 
‘‘(b)(1) Amounts under this section shall be payable 
with respect to each pay period (which would otherwise 
apply if the employee’s civilian employment had not been 
interrupted)— 
‘‘(A) during which such employee is entitled to 
reemployment rights under chapter 43 of title 38 
with respect to the position from which such em-
ployee is absent (as referred to in subsection (a)); 
and 
‘‘(B) for which such employee does not other-
wise receive basic pay (including by taking any an-
nual, military, or other paid leave) to which such 
employee is entitled by virtue of such employee’s ci-
vilian employment with the Government.
‘‘(2) For purposes of this section, the period during 
which an employee is entitled to reemployment rights 
under chapter 43 of title 38— 
‘‘(A) shall be determined disregarding the provi-
sions of section 4312(d) of title 38; and 
‘‘(B) shall include any period of time specified 
in section 4312(e) of title 38 within which an em-
ployee may report or apply for employment or reem-
ployment following completion of the service on ac-
tive duty to which called or ordered as described in 
subsection (a). 
‘‘(c) Any amount payable under this section to an em-
ployee shall be paid— 
‘‘(1) by such employee’s employing agency; 
‘‘(2) from the appropriation or fund which 
would be used to pay the employee if such employee 
were in a pay status; and 
‘‘(3) to the extent practicable, at the same time 
and in the same manner as would basic pay if such 
employee’s civilian employment had not been inter-
rupted. 
‘‘(d) The Office of Personnel Management shall, in 
consultation with Secretary of Defense, prescribe any reg-
ulations necessary to carry out the preceding provisions 
of this section.
‘‘(e)(1) The head of each agency referred to in section 
2302(a)(2)(C)(ii) shall, in consultation with the Office, 
prescribe procedures to ensure that the rights under this 
section apply to the employees of such agency. 
‘‘(2) The Administrator of the Federal Aviation Ad-
ministration shall, in consultation with the Office, pre-
scribe procedures to ensure that the rights under this sec-
tion apply to the employees of that agency. 
‘‘(f) In this section— 
‘‘(1) the terms ‘employee’, ‘Federal Govern-
ment’, and ‘uniformed services’ have the same re-
spective meanings as given them in section 4303 of 
title 38; 
‘‘(2) the term ‘employing agency’, as used with 
respect to an employee entitled to any payments 
under this section, means the agency or other entity 
of the Government (including an agency referred to 
in section 2302(a)(2)(C)(ii)) with respect to which 
such employee has reemployment rights under chap-
ter 43 of title 38; and 
‘‘(3) the term ‘basic pay’ includes any amount 
payable under section 5304.’’. 
(b) TECHNICAL AND CONFORMING AMENDMENT.— 
The table of sections for chapter 55 of title 5, United
States Code, is amended by inserting after the item relat-
ing to section 5537 the following: 
‘‘5538. Nonreduction in pay of Reserves on active duty in the uniformed serv-
ices for extended periods.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to pay periods (as de-
scribed in section 5538(b) of title 5, United States Code, 
as added by this section) beginning on or after the date 
of enactment of this Act. 
SEC. 302. CREDIT FOR INCOME DIFFERENTIAL FOR EM-
PLOYMENT OF ACTIVATED MILITARY RE-
SERVIST AND REPLACEMENT PERSONNEL. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to foreign tax credit, etc.) is amended by 
adding at the end the following new section: 
‘‘SEC. 30B. EMPLOYER WAGE CREDIT FOR ACTIVATED MILI-
TARY RESERVISTS. 
‘‘(a) GENERAL RULE.—There shall be allowed as a 
credit against the tax imposed by this chapter for the tax-
able year an amount equal to the sum of— 
‘‘(1) in the case of a small business employer, 
the employment credit with respect to all qualified 
employees and qualified replacement employees of 
the taxpayer, plus
‘‘(2) the self-employment credit of a qualified 
self-employed taxpayer. 
‘‘(b) EMPLOYMENT CREDIT.—For purposes of this 
section— 
‘‘(1) QUALIFIED EMPLOYEES.— 
‘‘(A) IN GENERAL.—The employment cred-
it with respect to a qualified employee of the 
taxpayer for any taxable year is equal to the 
lesser of— 
‘‘(i) the excess, if any, of— 
‘‘(I) the qualified employee’s av-
erage daily qualified compensation for 
the taxable year, over 
‘‘(II) the average daily military 
pay and allowances received by the 
qualified employee during the taxable 
year, 
while participating in qualified reserve 
component duty to the exclusion of the 
qualified employee’s normal employment 
duties for the number of days the qualified 
employee participates in qualified reserve 
component duty during the taxable year, 
including time spent in a travel status, or 
‘‘(ii) $15,000.