Is my personal injury settlement taxable?

Generally, compensation received for physical injuries or physical sickness is not taxable income under federal tax law. That includes amounts for medical bills, lost wages tied to the physical injury, and pain and suffering. Some parts of a recovery may be taxable, such as punitive damages, interest, and certain amounts not tied to a physical injury. Florida has no state personal income tax. Because every situation is different, talk with a tax professional about your specific settlement.