Sponsors (5)
The bill closes a tax loophole by making damages to the President taxable and disallowing related deductions to protect revenue and fairness, but it raises tax bills for recipients and increases compliance costs for taxpayers and administrators.
All taxpayers: Disallowing related deductions closes a loophole and helps preserve the tax base and tax system integrity.
All taxpayers: Clarifies that damages paid to the President are taxable, preventing a tax-free windfall and making tax treatment more consistent.
Presidents or payors (e.g., federal employees receiving damages): May face higher tax liabilities on damages received, reducing their net recoveries after awards.
Taxpayers, the IRS, and reporting/payor parties: Increased compliance and administrative burden from new chapter and rule changes for reporting, withholding, and enforcement.
Based on analysis of 4 sections of legislative text.
Taxes damages the President receives from civil suits against the United States and disallows related deductions; effective for amounts received after enactment.
Imposes a federal tax on damages received by the President that arise from a civil action filed against the United States and prevents related tax deductions; the change applies to amounts received after the law takes effect. The amendment adds a new chapter to the Internal Revenue Code subtitle that treats such damages as taxable and updates the subtitle chapter table accordingly.
Introduced March 17, 2026 by Ronald Lee Wyden · Last progress March 17, 2026