Omnibus Tax Equity Act of 1981

Omnibus Tax Equity Act of 1981 - Title I: Indexation of Tax Rates - Amends the Internal Revenue Code to provide cost of living adjustments based on the Consumer Price Index to the income tax rates of individuals, the personal tax exemption, withholding requirements and income tax return amounts.

Title II: Promotion of Charitable Contributions - Extends the income tax deduction for charitable contributions to non-itemizing taxpayers.

Provides that the standard mileage rate used in computing the charitable deduction for expenses incurred in the operation of a motor vehicle shall be the same as the standard mileage rate for the business expense deduction.

Title III: Credit for Social Security Taxes Paid - Allows a refundable income tax credit for an amount equal to ten percent of the taxpayer's social security taxes for 1981 and 1982.

Title IV: Reduction of Marriage Penalty - Allows married individuals filing jointly an income tax deduction from gross income equal to ten percent of the earned income of the lower income spouse (or of one spouse if both incomes are the same). Limits the deduction to $2,000 for the taxable year. Denies such deduction if one spouse has earned income amounting to less than 20 percent of the combined income of both spouses.

Title V: Taxation of Foreign Earned Income - Increases from $20,000 to $75,000 in 1981 (with annual adjustments up to $95,000 in 1985 and thereafter) the earned income exclusion for U.S. citizens working abroad who are bona fide residents of a foreign country. Repeals the requirement that, as a condition of their employment, such individuals reside in a hardship area. Reduces from 17 to 11 months the residency requirement for such exclusion.

Provides for an income tax exclusion for the value of employer provided lodging in a camp in cases where satisfactory housing is not generally available.

Reduces from 17 to 11 months the foreign residency requirement with respect to the deduction for certain housing expenses of living abroad.