A bill to amend the Internal Revenue Code of 1954 to exclude from gross income any payments made under the retired serviceman's family protection plan by an individual who has waived his military retirement pay in order to receive a civil service retirement annuity.

Prescribes a special rule, for purposes of determining gross income under the Internal Revenue Code, in cases where a former serviceman has waived military retirement pay to receive a civil service retirement annuity. States that the amount of civil service retirement annuity paid to such individual shall be deemed to be reduced by the amount of payments made under a retired serviceman's family protection plan.