Do I Have To Pay Taxes On My Personal Injury Settlement?

Do I Have To Pay Taxes On My Personal Injury Settlement?

I often receive this question from my client long after we close their case. They are typically preparing for tax time and they mention to their accountant that they received some money in a personal injury settlement. The accountant then asks them if the settlement is taxable or considered income.

The client immediately feels a sinking feeling in the pit of their stomach and thinks, “Oh my god! Is Uncle Sam going to treat that settlement money like income and tax me on it?” Most accountants should know the laws around this, but many usually defer to the personal injury attorney to answer the question.

The general answer to the question of whether or not a personal injury settlement is taxable is no. However, this is only true if you sustained a physical injury in the accident and all damages are resulting from the physical injury or injuries you received.

So, all money you received to pay your medical bills, compensate you for lost earnings and pain and suffering all stemming directly from the physical injury you suffered, will not be taxed. As our firm specifically handles only pedestrian, bicycle, motorcycle and auto injury cases, we can confidently tell all of our clients that their settlements are not taxable.

However, if you have a different type of case (one that we do not handle at this office), like an employment case or harassment case, your settlement may be taxable. It is important to discuss these issues with your personal injury traffic accident attorney and your accountant to make sure you plan accordingly.

Accident Client

If you’re someone who is considering an attorney for a personal accident, I highly recommend Sally Morin and her professional staff of attorneys. If you would like to know more details, feel free to contact me via Yelp and I would be happy to share more details. While I use Yelp quite often, I rarely post reviews… unless I’m truly blown away by great service (or angry with horrible service). If there were a sixth star, I would certainly give it to Rebecca and Sally!

We're here to help with your Personal Injury claim

Check out our Personal Injury FAQ Page to learn more about how the process works.

We Handle Your Personal Injury Accident Claim So You Can Focus on Your Life

After an accident, contact the attorneys at Sally Morin Personal Injury Lawyers. We handle many types of traffic injury claims. We believe you should be able to focus on recovering from your accident while we handle the legal details.

We truly care about the people of California. Contact us today for a
free online case evaluation.


It is essential to know your rights after a traffic accident so you can protect yourself and the value of your claim.
This guide will help you:

  • 1Know what to do when dealing with insurance claims, police reports and lawyers.
  • 2Avoid making mistakes that undermine the value of your claim
  • 3Put yourself in a position to get the best settlement possible