A bill to exclude from Federal income taxation amounts received in settlement of refund claims for State or local income taxes on Federal retirement benefits which were not subject to State or local income taxation on the same basis as State or local retirement benefits.

Amends the Internal Revenue Code to exclude from gross income any amount received after December 31, 1994, from a State in settlement of a claim for a refund of State income taxes attributable to the taxation of any protected retirement benefit of an officer or employee of the United States paid before January 1, 1990.