{"id":5695,"date":"2013-02-13T09:00:19","date_gmt":"2013-02-13T09:00:19","guid":{"rendered":"http:\/\/www.duncanlawonline.com\/?p=5695"},"modified":"2026-06-03T08:57:01","modified_gmt":"2026-06-03T12:57:01","slug":"do-i-have-to-pay-taxes-on-workers-compensation-settlements","status":"publish","type":"post","link":"https:\/\/www.duncanlawonline.com\/staging\/8350\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\/","title":{"rendered":"Do I Have To Pay Taxes On Workers\u2019 Compensation Settlements?"},"content":{"rendered":"<p>The task of fighting for, being approved and actually receiving your workers\u2019 compensation settlement is daunting enough, but what are you to do when you file taxes? Do you pay taxes on the settlements? Should you be setting money aside to cover that?<\/p>\n<p><img decoding=\"async\" loading=\"lazy\" class=\"alignleft size-medium wp-image-8170\" src=\"https:\/\/www.duncanlawonline.com\/wp-content\/uploads\/2015\/04\/Calendar-300x199.jpg\" alt=\"Circling a Date on Calendar\" width=\"300\" height=\"199\" srcset=\"https:\/\/www.duncanlawonline.com\/staging\/8350\/wp-content\/uploads\/2015\/04\/Calendar-300x199.jpg 300w, https:\/\/www.duncanlawonline.com\/staging\/8350\/wp-content\/uploads\/2015\/04\/Calendar.jpg 425w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/>The answer to your question is no. Workers\u2019 compensation settlements are fully tax-exempt if paid under the Workers\u2019 Compensation Act; according to <a href=\"http:\/\/www.irs.gov\/publications\/p907\/ar02.html\">Publication 907<\/a>, \u201cWorkers\u2019 Compensation for an occupational sickness or injury if paid under a Workers\u2019 Compensation act or similar law\u201d is exempt.<\/p>\n<p>Workers\u2019 Compensation is in the same category of non taxable income as the following:<\/p>\n<p style=\"padding-left: 60px;\">Payments from public welfare fund.<\/p>\n<p style=\"padding-left: 60px;\">Compensatory (but not punitive) damages for physical injury or sickness.<\/p>\n<p style=\"padding-left: 60px;\">Disability benefits under a \u201cno fault\u201d car insurance policy for loss of income or earnings capacity as a result of injuries.<\/p>\n<p style=\"padding-left: 60px;\">Compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement.<\/p>\n<p>Your workers\u2019 compensation settlement (and weekly benefits) being tax exempt is important. Not having to pay taxes on those benefits could save you thousands of dollars. Should you feel as if you have been injured on the job and deserve compensation, please feel free to contact our office and set up a free consultation to discuss your possible case.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The task of fighting for, being approved and actually receiving your workers\u2019 compensation settlement is daunting enough, but what are you to do when you file taxes? Do you pay taxes on the settlements? Should you be setting money aside to cover that?<\/p>\n<p>Circling a Date on CalendarThe answer to your question is no. Workers\u2019 compensation settlements are fully tax-exempt if paid under the Workers\u2019 Compensation Act; according to Publication 907, \u201cWorkers\u2019 Compensation for an occupational sickness or injury if paid under a Workers\u2019 Compensation act or similar law\u201d is exempt.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"video","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4169,15],"tags":[],"class_list":["post-5695","post","type-post","status-publish","format-video","hentry","category-financial-tips","category-workers-compensation","post_format-post-format-video"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.7 (Yoast SEO v27.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Workers&#039; Comp Settlement Taxes | Duncan Law<\/title>\n<meta name=\"description\" content=\"Workers&#039; compensation settlements are fully tax-exempt under federal law. Learn why you won&#039;t owe taxes on your benefits and what that means for you.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.duncanlawonline.com\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Do I Have To Pay Taxes On Workers\u2019 Compensation Settlements?\" \/>\n<meta property=\"og:description\" content=\"The task of fighting for, being approved and actually receiving your workers\u2019 compensation settlement is daunting enough, but what are you to do when you file taxes? Do you pay taxes on the settlements? Should you be setting money aside to cover that?  Circling a Date on CalendarThe answer to your question is no. Workers\u2019 compensation settlements are fully tax-exempt if paid under the Workers\u2019 Compensation Act; according to Publication 907, \u201cWorkers\u2019 Compensation for an occupational sickness or injury if paid under a Workers\u2019 Compensation act or similar law\u201d is exempt.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.duncanlawonline.com\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\/\" \/>\n<meta property=\"og:site_name\" content=\"Duncan Law\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/duncanlawonline\" \/>\n<meta property=\"article:published_time\" content=\"2013-02-13T09:00:19+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-06-03T12:57:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.duncanlawonline.com\/wp-content\/uploads\/2015\/04\/Calendar-300x199.jpg\" \/>\n<meta name=\"author\" content=\"Damon Duncan\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@DuncanLaw\" \/>\n<meta name=\"twitter:site\" content=\"@DuncanLaw\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Damon Duncan\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\\\/\"},\"author\":{\"name\":\"Damon Duncan\",\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/#\\\/schema\\\/person\\\/f7b4948225deab021c8ba0edbea00655\"},\"headline\":\"Do I Have To Pay Taxes On Workers\u2019 Compensation Settlements?\",\"datePublished\":\"2013-02-13T09:00:19+00:00\",\"dateModified\":\"2026-06-03T12:57:01+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\\\/\"},\"wordCount\":226,\"publisher\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.duncanlawonline.com\\\/wp-content\\\/uploads\\\/2015\\\/04\\\/Calendar-300x199.jpg\",\"articleSection\":[\"Financial Tips\",\"Workers' Compensation\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\\\/\",\"url\":\"https:\\\/\\\/www.duncanlawonline.com\\\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\\\/\",\"name\":\"Workers' Comp Settlement Taxes | Duncan Law\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.duncanlawonline.com\\\/do-i-have-to-pay-taxes-on-workers-compensation-settlements\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.duncanlawonline.com\\\/wp-content\\\/uploads\\\/2015\\\/04\\\/Calendar-300x199.jpg\",\"datePublished\":\"2013-02-13T09:00:19+00:00\",\"dateModified\":\"2026-06-03T12:57:01+00:00\",\"description\":\"Workers' compensation settlements are fully tax-exempt under federal law. 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