Sexual assault and abuse survivors who win a legal settlement or court judgment currently have to pay federal income tax on those damages in many cases — this bill would change that. Under current law, only damages tied to a "physical injury" are tax-free; survivors without visible injuries or medical records often face tax bills on money they received for harm done to them. The bill would explicitly exempt from gross income any settlement or award tied to sexual acts or sexual contact, with no requirement for observable physical injury as proof. Settlements and court decisions reached after the law's enactment would qualify, and the Treasury Department would be required to run a public awareness campaign so survivors know about the new tax protection.
Congressional Summary
Survivor Justice Tax Prevention ActThis bill excludes from gross income certain damages received by an individual due to any sexual act or sexual contact and establishes the applicable burden of proof in court proceedings regarding the characterization of such damages for federal tax purposes. Under current law, amounts received as damages (other than punitive damages) from a judgment, award, or settlement of a claim may be excluded from gross income and, thus, are not subject to federal income tax, if attributable to a personal physical injury or physical sickness. The Internal Revenue Service (IRS) generally interprets personal physical injury to require observable bodily harm (e.g., bruising, cuts, swelling, or bleeding).Under the bill, amounts received as damages (other than punitive damages) from a judgment, award, or settlement due to any sexual act or sexual conduct, whether or not there are medical records or observable injuries of such act or contact, may be excluded from gross income.Further, if a judgment, award, or settlement states that damages are due to any sexual act or sexual conduct, then the IRS has the burden of proving otherwise in court proceedings related to the tax liability associated with such damages. Finally, the bill requires the IRS to promote public awareness of the exclusion from gross income of damages related to any sexual act or sexual contact.
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Reported to House
- Action Date
- 2026-04-09
- Date Added
- 2026-04-24
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