If I win my personal injury lawsuit, do I need to pay taxes?
The proceeds received from most personal injury claims are not taxable under either federal or state law. This is true whether your case was settled or you went to trial and won a verdict.
This includes all of the compensation for your injury, including medical bills, lost wages, emotional distress, pain and suffering, loss of consortium and attorney fees. As long as it relates to a personal injury, you do not pay taxes on it.