Sponsors (5)
The bill ensures damages from suits against the United States are taxed consistently and clarifies administration, but it reduces recipients' net recoveries and increases compliance/enforcement burdens.
Taxpayers who receive damages in suits against the United States will have those awards taxed like other taxable income, creating consistent tax treatment across similar receipts.
Taxpayers and the IRS will get clearer guidance because the bill explicitly places such damages within the taxable code, reducing ambiguity for administration and enforcement.
Taxpayers who receive damages will face a new tax liability on those awards, reducing the net compensation beneficiaries keep from successful suits.
Taxpayers and the IRS may face increased compliance and enforcement complexity because the bill expands the list of nondeductible items under §275, requiring more determinations about claim character.
Based on analysis of 2 sections of legislative text.
Treats damages paid to the President in a civil action against the United States as taxable by adding that category to the Internal Revenue Code's list of nondeductible items.
Makes damages a President receives in a civil suit against the United States subject to federal income tax by adding those amounts into the Internal Revenue Code’s list of nondeductible items. The change adds a new chapter to Subtitle D of the tax code and takes effect for amounts received after the date of enactment.
Introduced February 10, 2026 by Ronald Lee Wyden · Last progress February 10, 2026