A bill to amend section 103 of the Internal Revenue Code of 1954.

Exempts from income tax the interest on bonds issued to pay the costs of facilities for furnishing water, whether or not to the general public.

Exempts the interest on bond issues totaling less than $5,000,000. Provides that in determining the $5,000,000 total, capital expenditures of $500,000 will not be included. (Amends 26 U.S.C. 103)