Section 1 Short title
This Act may be cited as the “Public Service Retirement Tax Relief Act of 2026”.
Public Service Retirement Tax Relief Act of 2026
A BILL
To amend the Internal Revenue Code of 1986 to establish a cap on income taxes on certain pensions.
Sec. 2 Cap on income taxes on certain pensions
In general— Section 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
“(k) Special rule for individuals receiving certain pensions
“(1) In general—The amount of tax imposed under this chapter may not exceed the sum of—
“(A) the non-pension tax amount, plus
“(B) $10,000 ($20,000 in the case of a qualified joint return).
“(2) Non-pension tax amount—For purposes of this subsection, the term “non-pension tax amount” means the amount of tax imposed under this chapter, determined without regard to income received from a pension provided by a State or local government.
“(3) Qualified joint return—For purposes of this subsection, the term “qualified joint return” means a return of tax filed jointly by spouses who each receive income from a pension provided by a State or local government.”
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2025.