A bill to amend the Internal Revenue Code of 1954 with respect to the income tax treatment of earned income of citizens or residents of the United States earned abroad.

Amends the Internal Revenue Code to increase the earned income exclusion for United States citizens working abroad, who are bona fide residents of a foreign country, from an annual rate of $20,000 to: (1) $50,000; or (2) $65,000, if such persons have been working abroad for more than two years. Allows separate exclusions to married individuals who are both working overseas, although one's excess exclusion cannot be used against income earned by the other.

Allows an exclusion from gross income for housing allowances or housing expenses which exceed 20 percent of earned income (determined without regard to such allowance).

Repeals current provisions of the Code allowing tax deductions to such persons for certain living expenses abroad.