Tax Fairness for Survivors Act

This bill would make it so that people who receive money from lawsuits, settlements, or awards related to sexual harassment or sexual assault do not have to pay federal income taxes on that money. This includes backpay, punitive damages, attorney's fees, and any other payments connected to resolving these kinds of claims. The money would also not be subject to Social Security, railroad retirement, or unemployment insurance taxes. Under current law, money from settlements is only tax-free if it is tied to a physical injury or physical sickness, meaning people who receive payments for sexual harassment or assault claims that are not linked to physical harm generally have to pay taxes on those amounts.

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