Public Service Retirement Tax Relief Act of 2026

This Act may be cited as the “Public Service Retirement Tax Relief Act of 2026”.

(a) 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.”.

(b) Effective date.— The amendments made by this section shall apply to taxable years beginning after December 31, 2025.