After months of medical appointments and negotiations, your settlement check finally arrives. Then a new worry creeps in: how much of this will the IRS take? For most injury victims in Salem and throughout Oregon, the answer brings real relief.
The Good News: Most of It Is Tax-Free
Under federal law, compensation for physical injuries is generally not taxable, and Oregon follows the same rules. According to the IRS (Publication 4345, Settlements and Taxability, available at irs.gov), you typically do not owe taxes on:
- Medical expense reimbursement for your injuries
- Pain and suffering tied to a physical injury
- Lost wages recovered as part of a physical injury claim
- Emotional distress stemming from your physical injuries
Whether your settlement came from a car accident, a slip and fall, or a motorcycle crash, these core damages usually stay in your pocket.
The Exceptions to Know About
A few portions of a settlement can be taxable, including:
- Punitive damages, sometimes awarded in cases like drunk driving accidents
- Interest that accrues on your settlement or judgment
- Medical expenses you previously deducted on your tax return
How a settlement is structured matters, which is one more reason experienced legal guidance pays off long after your case closes.
Questions About Your Settlement? Ask Lance
Lance Youd has spent his career helping injured Oregonians keep more of what they’re owed. Your case review is free, and with our contingency fee promise, you pay nothing unless we win. Contact Youd Law today and get answers you can count on.
This article is provided for general informational purposes only and does not constitute legal or tax advice. Every situation is different, and tax laws can change. For guidance on your specific circumstances, please consult a qualified tax professional or contact Youd Law for a free case review.