To amend the Internal Revenue Code of 1986 to allow a credit against income tax for the purchase of 1994 and later model year passenger vehicles that are equipped with air bags, and to impose an excise tax on such vehicles that are not equipped with air bags.

Amends the Internal Revenue Code to allow a tax credit of $500 for purchase of 1994 or later model year automobiles equipped with a driver-side airbag, and a tax credit of $1,000 for such vehicles equipped with a passenger-side airbag. Makes such credit effective for trucks for 1995 or later models.

Imposes an excise tax on the sale by the manufacturer, importer, or producer of each 1994 or later model year automobile that is not an airbag-equipped automobile. Declares the amount of tax on each automobile to be: (1) $500 for the 1994 model year; (2) $500 for 1995 or later model years which are only equipped with a driver-side airbag; and (3) $1,000 for 1995 or later model years which are not equipped with airbags. Authorizes the Secretary of the Treasury to prescribe higher rates if the excise tax does not approximate the loss in revenues due to the tax credit. Imposes such excise tax on trucks beginning with the 1995 model year.

Provides for a reduction in the basis of an automobile on which such excise tax is imposed for purposes of determining gain or loss. Provides for the taxation of leases of automobiles subject to such excise tax.

Declares that provisions for tax-free sales to a State or local government for the exclusive use of such State or local government or to a nonprofit educational organization for its exclusive use do not apply to sales of automobiles that are not equipped with airbags.