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Referred to the House Committee on Ways and Means.
Adds new section 139J to Part III of Subchapter B of the Internal Revenue Code to exclude from gross income amounts received as judgments, awards, or settlements (including backpay, frontpay, punitive damages, attorney’s fees, and payments in connection with releases) for claims involving sexual assault or sexual harassment as defined.
Amends section 3121(a) by inserting a new paragraph (24) to exclude amounts that are excludable from an employee's gross income under new section 139J from the definition of wages for social security tax purposes.
Excludes money a person receives as a judgment, award, or settlement for sexual assault or sexual harassment from federal gross income and from wage/tax treatment. It also specifies that those excluded amounts are not treated as wages for Social Security, railroad retirement, unemployment, or wage‑withholding purposes and directs the Treasury to issue implementing regulations; the rule applies to taxable years beginning after enactment.
Introduced February 13, 2025 by Lois Frankel · Last progress February 13, 2025
