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      • Are Personal Injury Settlements Taxable?
      • Are Punitive Damages Tax Deductible?
      • Are Punitive Damages Taxable?
      • Are Settlements Taxed?
      • Do You Pay Taxes on a Settlement?
      • How is Cryptocurrency Taxed?
      • What is the Capital Gains Rate for Cryptocurrency?
  • -Lexis Legal Advantage FAQ
    • +Appellate Law
    • +Intellectual Property
    • +Labor & Employment
    • +Legal Tech
    • +Litigation
    • -Tax Law
      • Are Personal Injury Settlements Taxable?
      • Are Punitive Damages Tax Deductible?
      • Are Punitive Damages Taxable?
      • Are Settlements Taxed?
      • Do You Pay Taxes on a Settlement?
      • How is Cryptocurrency Taxed?
      • What is the Capital Gains Rate for Cryptocurrency?

Do You Pay Taxes on a Settlement?

A monetary settlement award resulting from a lawsuit, personal injury or otherwise, does potentially contain taxable...

Do You Pay Taxes on a Settlement?

A monetary settlement award resulting from a lawsuit, personal injury or otherwise, does potentially contain taxable elements.

It’s not a simple yes or no answer though. Let’s start easy: punitive damages (cash awarded to plaintiff as “punishment” for the defendant) certainly are taxable.

In a personal injury case, compensatory damages (resulting from an injury) weren’t historically taxed—yet changes to tax laws now dictate that compensatory damages must be linked to a physical injury in order to remain tax free. Compensatory damages related to emotional trauma may now qualify for taxation.

Here's a good breakdown on the nuances behind some of those personal injury settlement tax law changes: The Tax Ramifications of the Trump Tax Law on Personal Injury Settlements

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