Congress moves to spare sexual assault survivors from federal taxes on settlements
H.R. 1306 — Tax Fairness for Survivors Act · Filed by Lois Frankel (D-FL) · 5 cosponsors · Introduced Feb 13, 2025 · Referred to committee
Your members of Congress
Enter a ZIP to see where your representative and both senators stood on this bill.
Looked up on this device — your ZIP is never stored on our servers.
What it does
This bill exempts payments received from sexual assault or sexual harassment settlements, judgments, and awards from federal income taxation. Survivors would not owe income tax on these payments—whether lump-sum or periodic—including damages, attorney's fees, and backpay, and the bill also excludes these amounts from Social Security, railroad retirement, unemployment, and wage-withholding taxes.
Why we flagged it
The bill's core mechanism is a straightforward tax exclusion for sexual assault and harassment settlement proceeds. It operates as a targeted tax relief measure that aligns survivor compensation with existing personal-injury tax policy.
What the text implies
- Survivors may face reduced Social Security benefit calculations if settlements are excluded from wage-base calculations, potentially lowering future retirement benefits.
- The exclusion applies to all settlement components (punitive damages, attorney's fees, backpay), which may create administrative complexity in distinguishing taxable vs. non-taxable portions in mixed settlements.
The full analysis lists 3 implications of this text.
Who it affects
Survivors of sexual assault and harassment gain a concrete financial benefit by retaining more of their settlement proceeds without federal tax liability. This reduces the tax burden on victims and recognizes that compensation for harm should not be treated as taxable income, aligning with existing tax policy for other personal-injury settlements.