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This bill would make money people receive from sexual assault or sexual harassment claims free from federal income tax. That includes court judgments, awards, and settlements, along with related payments such as back pay, front pay, punitive damages, attorney’s fees, and money paid to resolve a claim. The bill is meant to help survivors keep the full amount they receive, instead of losing part of it to taxes. It also updates tax rules so these payments are not treated like regular wages for certain payroll tax purposes.
- Applies to payments tied to claims involving sexual assault or sexual harassment under federal, tribal, state, or local law.
- Covers lump-sum payments and periodic payments, as long as they are connected to the claim.
- Changes Social Security, railroad retirement, unemployment, and wage withholding rules so these amounts are not counted like taxable wages.
- Takes effect for tax years after the bill becomes law.
Official Summaries
Tax Fairness for Survivors Act
This bill excludes certain payments related to sexual assault or sexual harassment claims from gross income for federal tax purposes.
Specifically, the bill excludes from gross income amounts received by an individual from a judgment, award, or settlement of a claim (including backpay, frontpay, punitive damages, attorney’s fees, or any payments made to release, resolve, or settle a claim) related to sexual harassment or a nonconsensual sexual act or sexual contact. Further, under the bill, such amounts are not wages or compensation and, thus, not subject to certain payroll taxes (Social Security, railroad retirement, and unemployment insurance).
Under current law, amounts received from a judgment, award or settlement of a claim may be excluded from gross income if attributable to a personal physical injury or physical sickness. However, under current law, compensatory and other amounts received from a judgment, award or settlement unrelated to a personal physical injury or physical sickness generally are included in gross income. (Some exceptions apply.)
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1306 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 1306
To amend the Internal Revenue Code of 1986 to exclude from gross income
any judgments, awards, and settlements with respect to sexual assault
or sexual harassment claims, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 13, 2025
Ms. Lois Frankel of Florida (for herself and Ms. Tenney) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to exclude from gross income
any judgments, awards, and settlements with respect to sexual assault
or sexual harassment claims, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Tax Fairness for Survivors Act''.
SEC. 2. EXEMPTING FROM FEDERAL INCOME TAXATION PAYMENTS ALLOCABLE TO
SEXUAL ASSAULT OR SEXUAL HARASSMENT CLAIMS.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting before section
140 the following new section:
``SEC. 139J. AMOUNTS RECEIVED AS JUDGMENTS, AWARDS, AND SETTLEMENTS
WITH RESPECT TO SEXUAL ASSAULT OR SEXUAL HARASSMENT
CLAIMS.
``(a) In General.--In the case of an individual, gross income shall
not include any amount received as a judgment, award, or settlement
(including backpay, frontpay, punitive damages, reimbursement of
attorney's fees, or any payments made in connection with a release of
claims or to resolve or settle claims) whether by lump sum or periodic
payments from--
``(1) a claim involving the individual as the victim of an
alleged nonconsensual sexual act or sexual contact, as such
terms are defined in section 2246 of title 18, United States
Code, or similar applicable Tribal, State, or local law,
including when the victim lacks capacity to consent, or
``(2) a claim involving conduct that is alleged to
constitute sexual harassment of the individual under applicable
Federal, Tribal, State, or local law.
``(b) Regulations.--The Secretary shall prescribe such regulations
and other guidance as are necessary to carry out the purposes of
section, including regulations and other guidance to distinguish
amounts received in connection with a claim described in subsection (a)
from other amounts received.''.
(b) Social Security Taxes.--Section 3121(a) of such Code is amended
by striking ``or'' at the end of paragraph (22), by striking the period
at the end of paragraph (23) and inserting ``; or'', and by inserting
after paragraph (23) the following new paragraph:
``(24) any amount received which is excludable from the
gross income of the employee under section 139J.''.
(c) Railroad Retirement Tax.--Section 3231(e) of such Code is
amended by adding at the end the following new paragraph:
``(13) Amounts received as judgments, awards, and
settlements with respect to sexual assault or sexual harassment
claims.--The term `compensation' shall not include any amount
received which is excludable from the gross income of the
employee under section 139J.''.
(d) Unemployment Taxes.--Section 3306(b) of such Code is amended by
striking ``or'' at the end of paragraph (19), by striking the period at
the end of paragraph (20) and inserting ``, or'', and by inserting
after paragraph (20) the following new paragraph:
``(21) any amount received which is excludable from the
gross income of the employee under section 139J.''.
(e) Wage Withholding.--Section 3401 of such Code is amended by
striking ``or'' at the end of paragraph (22), by striking the period at
the end of paragraph (23) and inserting ``, or'', and by inserting
after paragraph (23) the following new paragraph:
``(24) any amount received which is excludable from the
gross income of the employee under section 139J.''.
(f) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is
amended by inserting before the item relating to section 140 the
following new item:
``Sec. 139J. Amounts received as judgments, awards, and settlements
with respect to sexual assault or sexual
harassment claims.''.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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