I
107TH CONGRESS
1ST SESSION
H. R. 2462
To amend the Internal Revenue Code of 1986 to provide an exclusion from
gross income for that portion of a governmental pension received by
an individual which does not exceed the maximum benefits payable under
title II of the Social Security Act which could have been excluded from
income for the taxable year.
IN THE HOUSE OF REPRESENTATIVES
JULY 11, 2001
Mr. BRADY of Pennsylvania introduced the following bill; which was referred
to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
an exclusion from gross income for that portion of a
governmental pension received by an individual which
does not exceed the maximum benefits payable under
title II of the Social Security Act which could have
been excluded from income for the taxable year.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Public Pension Parity
Act of 2001’’.
SEC. 2. EXCLUSION FOR CERTAIN PENSIONS AND ANNU-
ITIES UNDER PUBLIC RETIREMENT SYSTEMS.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from income) is amended by re-
designating section 139 as section 140 and by inserting
after section 138 the following new section:
‘‘SEC. 139. CERTAIN PENSIONS AND ANNUITIES UNDER
PUBLIC RETIREMENT SYSTEMS.
‘‘(a) GENERAL RULE.—Gross income does not in-
clude any amount (otherwise includable in gross income)
received by an individual as a qualified governmental pen-
sion.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR
LIMITATION.—The aggregate
amount excluded under subsection (a) for the tax-
able year shall not exceed—
‘‘(A) the maximum excludable social secu-
rity benefits of the taxpayer for such year, re-
duced 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 pen-
sion 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 re-
tirement system to the extent such pension or annu-
ity 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 Se-
curity 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 ex-
cluded from gross income if such benefit amount
were treated as social security benefits (within the
meaning of section 86(d)) received during the tax-
able year.
‘‘(3) 
APPLICABLE
MAXIMUM
BENEFIT
AMOUNT.—The term ‘applicable maximum benefit
amount’ means—
‘‘(A) in the case of an unmarried indi-
vidual, the maximum individual social security
benefit,
‘‘(B) in the case of a joint return, 150 per-
cent of the maximum individual social security
benefit, or
‘‘(C) in the case of a married individual fil-
ing a separate return, 75 percent of the max-
imum individual social security benefit.
For purposes of the preceding sentence, marital sta-
tus 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 retire-
ment age (as defined in section 216(l) of such
Act), and filed application for such benefits, on
the first day of such calendar year.
‘‘(B) PART YEARS.—In the case of an indi-
vidual 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 cor-
respond to such period.
‘‘(5) PUBLIC RETIREMENT SYSTEM.—The term
‘public retirement system’ means any pension, annu-
ity, 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 ‘‘139,’’ before
‘‘221’’.
(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 139
as section 140 and by inserting after the item relating to
section 138 the following new item:
‘‘Sec. 139. 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.
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