Survivor Justice Tax Prevention Act

This bill says that money someone receives because of a sexual act or sexual contact will not be taxed as income. This applies to court awards and settlements. Punitive damages are not included in this tax break and would still be taxed.

It also makes it easier to prove the reason for the payment: if the judgment or settlement agreement says the money is for a sexual act or sexual contact, that is enough, and the person does not need medical records to qualify for the tax break.

Key points

• Who is affected: People who receive damages because of a sexual act or sexual contact.
• What changes: These damages (except punitive damages) would not be taxed; a clear statement in the judgment or settlement counts as proof; no medical records are required to get the exclusion.
• When: It applies to amounts from judgments made and agreements entered into after the law takes effect. A judgment counts as “after” if the first payment comes after that date. Updated agreements that replace older ones do not count as new agreements for this purpose.

The bill also tells the Treasury Department to run a public awareness campaign about this tax exclusion, working with the Department of Justice’s Office on Violence Against Women and other federal agencies.