Our clients frequently ask us if they have to pay taxes on the money they receive from their personal injury case.
In the State of Florida, payments received as compensation for physical injury or physical sickness are not taxable by state law. Personal injury settlements are also not typically taxed by the federal government either. It doesn’t matter if the compensation is from a court-ordered award or an out-of-court settlement, and it makes no difference if it is paid in a lump sum or installments.
Compensation for emotional distress that arises from physical injury or sickness is also not considered taxable.
In general personal injury settlements are not taxed, however there are some money awards that you receive along with your injury claim that may be taxable so be careful and ask just to make sure.