{"id":353561,"date":"2016-04-04T10:47:02","date_gmt":"2016-04-04T15:47:02","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/injury\/workers-compensation\/are-workers-compensation-benefits-taxable.html"},"modified":"2023-08-24T10:25:03","modified_gmt":"2023-08-24T15:25:03","slug":"are-workers-compensation-benefits-taxable","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/injury\/workers-compensation\/are-workers-compensation-benefits-taxable.html","title":{"rendered":"Are Workers’ Compensation Benefits Taxable?"},"content":{"rendered":"\n
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Are Workers' Compensation Benefits Taxable?<\/h1>\n\n
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\n By Jade Yeban, Esq.<\/a> | Legally reviewed by Katrina Wilson, Esq.<\/a>\n | Last updated\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

Workers\u2019 compensation benefits are generally not taxable at the federal or state level. But if you also receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), a portion of your benefits may become taxable. A tax professional or attorney can explain how your specific situation may be affected.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

Workers’ compensation claims are a common concern for many workers injured on the job. This system pays workers’ comp payments for lost wages and medical expenses, often paid through a workers’ compensation settlement. This could be a weekly wage, a lump sum, or a combination. But are these benefits taxable?<\/p>\n

In general,\u00a0workers’ compensation benefits<\/a> are not taxable at state or federal levels. This is true regardless of the type of benefit (including death benefits, disability payments, workers’ comp settlements, etc.).<\/p>\n

This typically means you will not have to include these benefits when you file a tax return. It is as if the money you get from the insurance company through your compensation insurance is tax-free. However, there are some exceptions.<\/p>\n

This article provides a brief overview of workers’ compensation claims and taxes. Wage loss due to a workplace injury should not lead to financial stress. With the help of a local attorney<\/a>, you may be able to obtain a workers’ compensation settlement. They can also help you avoid any unpleasant tax surprises.<\/p>\n

Understanding Workers’ Compensation and Taxes<\/h2>\n

Most workers’ compensation benefits are not taxable at the state or federal levels. However, some of your\u00a0workers’ comp benefits<\/a>\u00a0may be taxed if you also receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).<\/p>\n

To learn more about the difference between the two, visit FindLaw’s\u00a0What’s the Difference Between SSDI and SSI?<\/a>\u00a0page.<\/p>\n

Workers’ compensation is in the same category of non-taxable income as the following:<\/p>\n