A bill to amend the Internal Revenue Code of 1954 to exclude from taxation interest earned on obligations substantially all of the proceeds of which are used to provide financing for railroad rehabilitation.

Amends the Internal Revenue Code to exclude from gross income interest earned on industrial development bonds substantially all of the proceeds of which are used to provide financing for railroad rehabilitation. Includes in such rehabilitation: (1) the acquisition, construction, reconstruction, or erection of any roadbed, track, trestle, depot, switching and signaling equipment, but not rolling stock; or (2) the acquisition of land or rights-of-way.