personal injury tax exclusion

https://federaltaxexemptioninjurypress.birchreport.com/posts/understanding-federal-tax-exemption-injury-in-mesothelioma-settlement-taxation

You might not realize that if you receive a settlement for a physical injury, that money is generally not taxed as income. The personal injury tax exclusion means you won't owe federal taxes on compensation for your actual physical harm, emotional distress tied to that physical injury, or medical expenses. However, interest earned on the settlement and punitive damages are taxable, so it's smart to chat with a tax pro after your case resolves.