{"id":353561,"date":"2016-04-04T10:47:02","date_gmt":"2016-04-04T15:47:02","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/injury\/workers-compensation\/are-workers-compensation-benefits-taxable.html"},"modified":"2026-09-14T09:41:05","modified_gmt":"2026-09-14T14:41:05","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 Susan Buckner, J.D.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\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’ compensation benefits<\/span> are generally not taxable<\/span> at the federal or state level. If you also receive Social Security Disability<\/span> Insurance<\/span> (SSDI<\/span>) a portion of your benefits may become taxable<\/span>. However, Supplemental Security Income<\/span> (SSI<\/span>) is non-taxable<\/span>. A tax professional or attorney can explain how your specific situation may be affected.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n

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Workers’ compensation claims are a common concern for many employees suffering work-related injuries<\/span>. This system provides payments for lost wages<\/span> and medical expenses<\/span>, often paid through a workers’ compensation settlement<\/span>. Are these benefits taxable<\/span>?<\/p>\n

In general, workers’ compensation benefits<\/span><\/a> are not taxable<\/span> at the state or federal level<\/span>. This often means you won\u2019t have to include these benefits when you file a tax return<\/span>. There are some important exceptions, particularly if you also receive Social Security benefits.<\/p>\n

This article provides a brief overview of workers’ compensation insurance<\/span> and taxes. With the help of a workers\u2019 compensation attorney<\/a>, you may be able to obtain a workers’ compensation settlement<\/span> and avoid any unpleasant tax surprises.<\/p>\n

Workers’ Comp Is (Usually) Tax-Free<\/h2>\n

For federal income tax<\/span> purposes, compensation awarded under a workers’ compensation act for a work-related sickness or injury is fully exempt from taxes<\/a>. This applies regardless of the benefit type, including disability payments, lump-sum settlements<\/span>, and death benefits<\/span> paid to survivors.<\/p>\n

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