The Tax Fairness for Survivors Act would exempt survivors of sexual assault and sexual harassment from paying federal income taxes on money they receive through legal judgments, awards, or settlements. This exemption would cover all types of compensation related to these claims, including back pay, punitive damages, attorney's fees, and periodic payments. The bill also ensures that these payments are not subject to Social Security taxes, railroad retirement taxes, unemployment taxes, or wage withholding requirements. Introduced by Senators Gillibrand and Blackburn in February 2025, the bill would take effect for tax years beginning after its enactment, with the Treasury Department authorized to issue guidance on how to distinguish these tax-exempt payments from other settlement amounts.
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