Is My Personal Injury Settlement Taxable?

Hi. I’m John Medler, personal injury lawyer with The Medler Law Firm – Personal Injury & Accident Attorneys. Today I’d like to talk about whether your personal injury settlement is taxable. The answer is most of the time it is not taxable. The reason is is that when you receive compensation for your injuries that is supposed to compensate you for the bodily injury that you suffered.

However, sometimes when you make a personal injury claim, you claim that you lost wages in the case or you suffered a loss of earning capacity. If any portion of that settlement is attributable to lost wages or lost earning capacity, that percentage will be taxable. So for example, if you decide that 90% of your settlement was for battling injury and 10% was for lost wages then that 10% would be taxable.

One thing to do is to consult with your tax advisor and determine whether it is appropriate to allocate some percentage for lost wages, which would be taxable, and what percentage then would be nontaxable as bodily injury. Again, always consult with a tax consultant.

If you have any more questions about personal injury, check out our website at or call The Medler Law Firm – Personal Injury & Accident Attorneys and ask for a free consultation with our Orange County personal injury attorney to evaluate your case.