A bill to amend the Internal Revenue Code of 1954 to increase the credit against tax for retirement income.

Allows as a credit against taxes imposed under the Internal Revenue Code an amount equal to 15 percent of the initial amount of an individual's retirement income (in the case of an individual 65 years of age or over) for the taxable year. States that such initial amount shall be (1) $2,500 in the case of a single individual, (2) $2,500 in the case of a joint return where only one spouse is eligible for the credit, (3) $3,750 in the case of a joint return where both spouses are eligible for the credit, or (4) $1,875 in the case of a married individual filing a separate return.

Reduces the initial amounts by the amount of any pension or annuity received during the taxable year which is excluded from gross income under the Internal Revenue Code.

States that, if adjusted gross income of the taxpayer exceeds (1) $7,500 in the case of a single individual, (2) $10,000 in the case of a joint return, or (3) $5,000 in the case of a married indivdiual filing a separate return, the initial amount shall be reduced by one-half of the excess of the adjusted gross income over $7,500, $10,000, or $5,000, as the case may be.

Authorizes an election of prior law with respect to public retirement system income.