Tax
May 7, 2026
Sexual assault settlements nuanced tax issues could soon change
The House of Representatives has passed bipartisan legislation that would amend the Internal Revenue Code so survivors of sexual abuse and unwanted, illegal sexual contact no longer pay taxes on their legal settlement income.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Although how lawsuit settlements are taxed is a nuanced subject, you might assume that sexual assault settlements would not present any tax issues. In fact, that is far from true. The potential applicability of taxes involves one of those fuzzy "it depends" answers. Although compensatory damages for personal physical injuries or physical sickness are tax free, damages for emotional injuries are fully taxable.
Over many decades, this has made taxing emot...
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