I 
109TH CONGRESS 
1ST SESSION 
H. R. 221 
To amend the Internal Revenue Code of 1986 to exclude from gross income 
certain interest amounts received by individuals. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 4, 2005 
Mr. STEARNS 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 exclude 
from gross income certain interest amounts received by 
individuals. 
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 ‘‘Simple Savings Tax 
Relief Act of 2005’’. 
SEC. 2. EXEMPTION OF CERTAIN INTEREST INCOME FROM 
TAX. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
amounts specifically excluded from gross income) is
amended by inserting after section 115 the following new 
section: 
‘‘SEC. 116. PARTIAL EXCLUSION OF INTEREST RECEIVED BY 
INDIVIDUALS. 
‘‘(a) EXCLUSION FROM GROSS INCOME.—Gross in-
come does not include interest otherwise includible in 
gross income which is received during the taxable year by 
an individual. 
‘‘(b) LIMITATIONS.— 
‘‘(1) 
MAXIMUM
AMOUNT.—The 
aggregate 
amount excluded under subsection (a) for any tax-
able year shall not exceed— 
‘‘(A) in the case of any taxable year begin-
ning in 2005, $200 ($400 in the case of a joint 
return), and 
‘‘(B) in the case of any taxable year begin-
ning after 2005, $400 (twice such amount in 
the case of a joint return). 
‘‘(2) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning after 2006, the $400 
amount contained in paragraph (1)(B) shall be in-
creased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year by substituting ‘calendar year 2005’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
If any increase under the preceding sentence is 
not a multiple of $10, such increase shall be 
rounded to the nearest multiple of $10. 
‘‘(c) INTEREST.—For purposes of this section, the 
term ‘interest’ means— 
‘‘(1) interest on deposits with a bank (as de-
fined in section 581), 
‘‘(2) amounts (whether or not designated as in-
terest) paid in respect of deposits, investment certifi-
cates, or withdrawable or repurchasable shares, by— 
‘‘(A) a mutual savings bank, cooperative 
bank, domestic building and loan association, 
industrial loan association or bank, or credit 
union, or 
‘‘(B) any other savings or thrift institution 
which is chartered and supervised under Fed-
eral or State law, 
the deposits or accounts in which are insured under 
Federal or State law or which are protected and 
guaranteed under State law. 
‘‘(d) CERTAIN NONRESIDENT ALIENS INELIGIBLE 
FOR EXCLUSION.—For purposes of this section, in the
case of a nonresident alien individual, subsection (a) shall 
apply only in determining the taxes imposed for the tax-
able year pursuant to sections 871(b)(1) and 877(b).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subparagraph (A) of section 32(i)(2) of 
such Code is amended by inserting ‘‘(determined 
without regard to section 116)’’ before the comma. 
(2) Subparagraph (B) of section 86(b)(2) of 
such Code is amended to read as follows: 
‘‘(B) increased by the sum of— 
‘‘(i) the amount of interest received or 
accrued by the taxpayer during the taxable 
year which is exempt from tax, and 
‘‘(ii) the amount of interest received 
during the taxable year which is excluded 
from gross income under section 116.’’. 
(3) Subsection (d) of section 135 of such Code 
is amended by redesignating paragraph (4) as para-
graph (5) and by inserting after paragraph (3) the 
following new paragraph: 
‘‘(4) COORDINATION WITH SECTION 116.—This 
section shall be applied before section 116.’’. 
(4) Paragraph (2) of section 265(a) of such 
Code is amended by inserting before the period ‘‘, or 
to purchase or carry obligations or shares, or to
make deposits, to the extent the interest thereon is 
excludable from gross income under section 116’’. 
(5) Subsection (c) of section 584 of such Code 
is amended by adding at the end the following new 
flush sentence: 
‘‘The proportionate share of each participant in the 
amount of interest received by the common trust fund and 
to which section 116 applies shall be considered for pur-
poses of such section as having been received by such par-
ticipant.’’. 
(6) Subsection (a) of section 643 of such Code 
is amended by redesignating paragraph (7) as para-
graph (8) and by inserting after paragraph (6) the 
following new paragraph: 
‘‘(7) INTEREST.—There shall be included the 
amount of any interest excluded from gross income 
pursuant to section 116.’’. 
(7) The table of sections for part III of sub-
chapter B of chapter 1 of such Code is amended by 
inserting after the item relating to section 115 the 
following new item: 
‘‘Sec. 116. Partial exclusion of dividends and interest received by individuals.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
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