Do I have to pay taxes on a personal injury settlement?

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A personal injury damage award is not subject to Federal or State income tax. The Internal Revenue Code and the New Jersey Gross Income Tax Act excludes from gross income the amount of any damages received on account of personal injuries or sickness. Similarly, workers compensation awards for permanency are not subject to State or Federal taxation. Lost wages recovered as a result of an injury are also excluded from taxable income.

However, if a person is receiving Social Security Disability benefits, a personal injury settlement may impact benefits. It may be necessary to arrange a Special Needs Trust to determine how to effectively distribute the personal injury award without an interruption of Disability benefits.


About RAM Law

RAM Law represents all of Central Jersey in personal injury cases and is staffed by experienced accident and injury attorneys. We provide legal help for victims of slip and fall accidents, medical malpractice, workplace injuries, truck and car accidents, and other personal injuries. Call (732) 247-3600 to discuss your case and set up a free consultation at our New Brunswick or Somerville law offices.

Contact Our Office

To schedule a confidential consultation, contact us online or call our offices, in New Brunswick at (732) 247-3600, in Somerville at (908) 448-2560, or in Freehold at (732) 828-2234.

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Multiple Offices Across New Jersey

New Brunswick

111 Livingston Avenue
New Brunswick, NJ 08901


21 North Bridge Street
Somerville, NJ 08876


31 W. Main Street 1st Floor
Freehold, NJ 07728

Free Case Review

Free Case Review