SECTION 1. EXCLUSION OF INCOME FOR RESIDENTS OF THE HURRICANES KATRINA 
              AND RITA CORE DISASTER AREA.

    (a) General Rule.--In the case of an individual, there shall be 
excluded from gross income for each taxable year beginning during 
calendar year 2005 an amount equal to the qualified earned income of 
the taxpayer.
    (b) Limitation Based on Foreign Earned Income Exclusion Rule.--
            (1) In general.--The amount which may be excluded under 
        subsection (a) for any taxable year shall not exceed the amount 
        of qualified earned income computed on a daily basis at an 
        annual rate equal to the exclusion amount for the calendar year 
        in which such taxable year begins.
            (2) Exclusion amount.--For purposes of paragraph (1), the 
        exclusion amount is the amount in effect for calendar year 2005 
        under section 911(b)(2) of the Internal Revenue Code of 1986.
    (c) Qualified Earned Income.--For purposes of this section--
            (1) In general.--The term ``qualified earned income'' means 
        earned income (as defined by section 911(d)(2) of such Code) of 
        a qualified individual. For purposes of the preceding sentence, 
        rules similar to the rules of section 911(b) of such Code shall 
        apply.
            (2) Qualified individual.--The term ``qualified 
        individual'' means an individual whose tax home is in the 
        Hurricanes Katrina and Rita core disaster area and--
                    (A) who is a citizen or resident of the United 
                States and establishes to the satisfaction of the 
                Secretary that he has been a bona fide resident of the 
                Hurricanes Katrina and Rita core disaster area for the 
                uninterrupted period which includes the entire taxable 
                year beginning in 2005,
                    (B) who is a citizen or resident of the United 
                States and who, during calendar year 2005, is present 
                in such core disaster area during at least 330 full 
                days in such year, or
                    (C) whose earned income for the immediately 
                preceding taxable year attributable to sources within 
                the Hurricanes Katrina and Rita core disaster area is 
                greater than 50 percent of such individual's total 
                earned income for such taxable year.
            (3) Tax home.--The term ``tax home'' means, with respect to 
        any individual, such individual's home for purposes of section 
        162(a)(2) of such Code (relating to traveling expenses while 
        away from home). An individual shall not be treated as having a 
        tax home in the Hurricanes Katrina and Rita core disaster area 
        for any period for which his abode is within the United States 
        outside of the Hurricanes Katrina and Rita core disaster area.
            (4) Hurricanes katrina and rita core disaster area.--
                    (A) In general.--The term ``Hurricanes Katrina and 
                Rita core disaster area'' means that portion of the 
                Hurricane Katrina disaster area and the Hurricane Rita 
                disaster area determined by the President to warrant 
                individual or individual and public assistance from the 
                Federal Government under the Robert T. Stafford 
                Disaster Relief and Emergency Assistance Act by reason 
                of Hurricane Katrina or Hurricane Rita.
                    (B) Hurricane katrina disaster area.--The term 
                ``Hurricane Katrina disaster area'' means an area with 
                respect to which a major disaster has been declared by 
                the President before September 14, 2005, under section 
                401 of the Robert T. Stafford Disaster Relief and 
                Emergency Assistance Act by reason of Hurricane 
                Katrina.
                    (C) Hurricane rita disaster area.--The term 
                ``Hurricane Rita disaster area'' means an area with 
                respect to which a major disaster has been declared by 
                the President, before October 6, 2005, under section 
                401 of the Robert T. Stafford Disaster Relief and 
                Emergency Assistance Act by reason of Hurricane Rita.
            (5) Waiver of period of stay.--Notwithstanding paragraph 
        (2), an individual who--
                    (A) is a bona fide resident of, or is present in, 
                the Hurricanes Katrina and Rita core disaster area for 
                any period,
                    (B) leaves the Hurricanes Katrina and Rita core 
                disaster area by reason of Hurricane Katrina or 
                Hurricane Rita--
                            (i) during any period during which the 
                        Secretary determines that individuals were 
                        required to leave such area because of adverse 
                        conditions in such area which precluded the 
                        normal conduct of business by such individuals, 
                        and
                            (ii) before meeting the requirements of 
                        paragraph (1), and
                            (iii) establishes to the satisfaction of 
                        the Secretary that such individual could 
                        reasonably have been expected to have met such 
                        requirements but for the conditions referred to 
                        in clause (i),
                shall be treated as a qualified individual with respect 
                to the period described in subparagraph (A) during 
                which he was a bona fide resident of, or was present 
                in, such core disaster area and in applying subsection 
                (b) with respect to such individual, only the days 
                within such period shall be taken into account.
    (d) Secretary Defined.--For purposes of this section, the term 
``Secretary'' means the Secretary of the Treasury or the Secretary's 
delegate.
    (e) Amounts Excluded Treated as Section 911 Exclusion for Purposes 
of Internal Revenue Code of 1986.--For purposes of the Internal Revenue 
Code of 1986, any amount excluded under this section shall be treated 
as an amount to excluded under section 911 of such Code.
    (f) Rule of Interpretation.--This section shall be interpreted and 
applied using the principles of section 911 of such Code.
    (g) Regulations.--The Secretary shall prescribe such regulations as 
may be necessary or appropriate to carry out the purposes of this 
section. Such regulations shall be similar to the regulations 
prescribed under section 911(d)(9) of such Code.
Allows individual taxpayers residing in the Hurricanes Katrina and Rita core disaster areas an exclusion from gross income, for federal income tax purposes, for a certain amount of their income earned in 2005 within such disaster areas.
To provide an exclusion from gross income for income earned in 2005 from sources within the Hurricanes Katrina and Rita core disaster area.