Sponsors (16)
The bill clarifies that damages paid to the President are taxable—reducing legal ambiguity for payees and the IRS—but it raises taxes and cuts net recoveries for recipients and adds administrative costs for the IRS.
The President and other recipients of damages will have those damages treated as taxable income, creating consistent tax treatment and clearer IRS guidance on deductibility so payees and tax administrators face less ambiguity.
Recipients of damages (including the President) will likely face higher federal tax liabilities and—if deductions are narrowed—receive smaller net recoveries from settlements or awards.
The IRS will incur added administrative and enforcement burden to implement and apply a new, President-specific tax rule, increasing compliance costs and workload for tax administrators.
Based on analysis of 2 sections of legislative text.
Treats damages received by the President in civil actions against the United States as taxable income and disallows related deductions for amounts received after enactment.
Imposes federal tax treatment on monetary damages the President receives in connection with civil actions filed against the United States and disallows related deductions; the rule applies to amounts received after the bill becomes law. The measure amends the Internal Revenue Code to add a new Subtitle D chapter and adds a provision to the section that lists nondeductible items, making these payments taxable and clarifying deduction limits.
Introduced February 4, 2026 by Michael Thompson · Last progress February 4, 2026