Budget Neutral American Tax Relief Act

Budget Neutral American Tax Relief Act - Amends the Internal Revenue Code to, as a general rule, substitute the indexed basis (the adjusted basis increased by the applicable inflation adjustment factor) for the adjusted basis for purposes of determining the gain on the sale of an indexed asset held by an individual more than three years.

Provides, as a general rule, for the treatment of an American Dream Savings Account (ADS account) in the same manner as an individual retirement plan (IRP). Defines an ADS account as an IRP designated at the time of its establishment as an ADS account. Prohibits the deduction of ADS contributions. Limits ADS contributions. Exempts from gross income qualified distributions, which include distributions made: (1) after the account holder attains the age of 59 and one-half; (2) to a beneficiary following the account holder's death; (3) which are attributable to the account holder's disability; and (4) to pay for qualified higher education, medical, or first-time homebuyer expenses.

Provides for the phaseout and repeal of the tax increase on social security benefits made under the Revenue Reconciliation Act of 1993.

Requires any reductions in revenues to the Federal Government by reason of the amendments made by this Act to be offset by reductions in the funds available for the Department of Commerce and the Department of Energy.