Survivors of sexual assault finally get tax relief on settlements
S. 584 — Tax Fairness for Survivors Act · Filed by Kirsten Gillibrand (D-NY) · 1 cosponsor · Introduced Feb 13, 2025 · Referred to committee
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What it does
This bill amends the tax code to exclude from federal income taxation any money received by survivors of sexual assault or sexual harassment through judgments, awards, or settlements—including back pay, punitive damages, and attorney's fees. The exclusion applies to federal income tax, Social Security taxes, railroad retirement taxes, unemployment taxes, and wage withholding, ensuring survivors do not owe taxes on compensation for sexual abuse.
Why we flagged it
The bill's sole operative mechanism is a tax exclusion—survivors of sexual assault and harassment are exempted from federal income taxation on settlement proceeds. This is a straightforward tax relief measure with no hidden provisions or unrelated riders.
What the text implies
- Survivors may face state income tax liability on the same settlements, as this bill only addresses federal taxation; state-level advocacy may be needed for full relief.
- The bill's reliance on IRS guidance (subsection b) to distinguish sexual-assault settlements from other settlement components may create administrative complexity and potential disputes over what qualifies.
The full analysis lists 4 implications of this text.
Who stands to gain
survivors of sexual assault and sexual harassment (individuals)