Legal Question in Personal Injury in California

The general rule is: No. If you are receiving a settlement for injuries and emotional distress, that is very rarely taxable.

If you have lost income within that settlement, it is possible that aspect is taxable.

See here for more: https://www.irs.gov/pub/irs-pdf/p4345.pdf

Generally no.However if part of the settlement is loss of earnings or loss of earning capacity it could be considered taxable income.However most settlement drafts dont detail the breakdown of the the settlement figure.What is settled is that the pain and suffering part of the settlement is not taxable income nor is the amount of the medical expenses incurred that the settlement is based on