Sponsors (18)
The bill eliminates a tax exception by making damages paid to the President taxable—modestly increasing revenue and tax parity—while imposing new tax costs on recipients and potentially creating precedent that could complicate future settlements.
Taxpayers and the federal budget: damages paid to the President in civil suits against the U.S. will be treated as taxable income, closing a special exemption and modestly increasing federal revenue.
Federal employees and other recipients of damages: aligns tax treatment of such damages with ordinary compensation, improving tax parity and removing a special tax-free exception.
Taxpayers and litigants: creates a precedent that may extend taxable treatment to damages paid to other public officials or change expectations around tax treatment of settlements, potentially complicating negotiations and compensation structures.
The President (and any federal employee who receives similar damages): will face a new tax liability on damages received, reducing the net recovery from such awards.
Based on analysis of 2 sections of legislative text.
Damages paid by the U.S. to the President in civil suits are treated as taxable income and removed from a nondeductible-tax listing, effective after enactment.
Makes damages paid by the United States to the President in a civil action taxable income and removes those payments from a listed nondeductible category in the tax code. The change applies to amounts received after the law takes effect. The amendment is narrow and technical: it adds a new chapter to Subtitle D of the Internal Revenue Code and changes the treatment of those specific payments for federal income tax purposes. It does not create new programs or appropriate funds.
Introduced February 4, 2026 by Michael Thompson · Last progress February 4, 2026