The Senate late Friday approved and sent to the White House legislation that prohibits states from taxing pension income of former residents who live in another state.
Critics have argued that such a tax affects tens of thousands of retirees.
Sen. Harry Reid (D-Nev.), who has campaigned for such a ban for five years, said states increasingly have sought revenue through such a tax on pensions as they face growing budget problems.
"Thousands of retired Nevadans are getting notices from California and other states to pay this dubious 'source' tax," said Reid.
The legislation was approved by the House last week and Reid said he anticipates that President Clinton will sign the bill into law.