A bill to amend the Internal Revenue Code of 1954 to exempt from tax a portion of the income of individuals not employed by the Federal Government who live in a State in which Federal employees receive an allowance based on living costs and conditions of environment.

Amends the Internal Revenue Code to allow individuals who are not employed by the Federal Government a tax exclusion for that portion of their personal service income which is equal to the allowance permitted Federal employees in certain States for higher living costs and extreme conditions of environment.