Is My Personal Injury Settlement Taxable?

person handing a pen to another person

We often get questions about whether a personal injury settlement is taxable.

The answer is a bit complicated.

Here are the facts…

As a general rule, taxes are only due on the portion of your injury settlement that covers lost income and lost future earnings.  You may want to seek the guidance of an accountant to make sure that only that portion of your settlement is, in fact, taxed.

The parts of a settlement that are not taxable include compensation for the following:

  • Diminished quality of life
  • Loss of enjoyment of life
  • Scarring or disfigurement
  • Medical expenses and equipment
  • Emotional distress
  • Property damages
  • Loss of household services
  • Unexpected child care cost

According to the state of Connecticut, “medical malpractice cases resulting in damages typically involve physical injury to the patients caused by what the health care provider did or failed to do. It does not appear that damages resulting from a physical injury are taxable under either state or federal law with the following two exceptions – punitive damages and interest on any damage award.”

If you or a loved one are ever injured in an accident of any kind in Connecticut, know that the Connecticut personal injury lawyers at RisCassi & Davis have been assisting people like you who’ve been injured in accidents for over 60 years.  And we have received both state and national recognition for our work in this area.  If you are ever injured in an accident of any kind and would like a free consultation with one of our personal injury attorneys, please contact us.   There is no obligation. 

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