A bill to amend the Internal Revenue Code of 1986 to provide that service performed for an elementary or secondary school operated primarily for religious purposes is exempt from the Federal unemployment tax.

Amends the Federal Unemployment Tax Act to exempt from State unemployment tax law coverage (providing for payments in lieu of unemployment fund contributions) any service performed in the employ of a tax-exempt private elementary or secondary school that is operated primarily for religious purposes. Applies this exemption retroactively to services performed after 1977.