Is a Personal Injury Settlement Taxable, and How Can a Fishers Personal Injury Lawyer Help?

April 1, 2025

Major injuries occur far too frequently in Fishers, including in car crashes, construction accidents, and slip-and-falls, and they may demand prolonged treatment that few could afford without assistance.  Fortunately, assistance might be available when somebody else is to blame for your own accidental injury, and a skilled legal practitioner could increase the amount that you obtain, though it is natural to be concerned about the challenges that may lay ahead of you.  For example, is a personal injury settlement taxable, and how can a Fishers personal injury lawyer help?  Let Hensley Legal Group explain the value of hiring a capable attorney after an accident. 

Taxes are Usually Not Taken Out of Personal Injury Compensation 

Given the toll that a serious accident can take on your bank account, it is critical to hold on to as much of your personal injury settlement or verdict as you can.  This is why you may be pleased to discover that taxes are usually not taken out of personal injury compensation at either the federal or state levels, provided that the compensation is awarded for an injury or illness.  However, some of its components might still be taxable. 

Among the potentially taxable elements of a personal injury compensation package are financial damages for “mental and emotional distress arising from non-physical injuries,” though damages related to psychological anguish “on account of physical injury or sickness” may remain untaxed.  

Furthermore, taxes could be levied on the punitive damages that courts sometimes impose when a defendant’s actions are especially reckless so that future misconduct can be discouraged.  Because IRS regulations stipulate that “punitive damages are not excludable from gross income,” the portion of your settlement or verdict that is comprised of punitive damages would likely be taxed in the way that income normally would. 

What a Fishers Personal Injury Attorney Can Do for You  

These are the main exceptions pertaining to the taxation of personal injury claims, but others may exist, so it might be a good idea to review your rights and obligations under the law with a knowledgeable Fishers personal injury attorney who could also get you top dollar for your case. 

The reality is that your relative inexperience puts you at a disadvantage when dealing with the defendants’ insurance carriers, who are typically your primary sources of economic recovery and who may try to exploit that inexperience to settle your claim for less or deny it altogether.   

Yet just as this won’t be the first accidental injury for a veteran insurance adjuster, it won’t be the first for a veteran lawyer either, who will be better equipped to fend off the tricks and tactics that you would otherwise face.  This is a key reason why personal injury victims receive 3.5 times more on average with attorneys than they do without them. 

A seasoned Fishers personal injury lawyer will begin by identifying the root causes of your accident and all of the defendants who may be responsible for it, then establish valid claims against them and possibly file a lawsuit as well when warranted.   

After amassing the evidentiary materials necessary to build a rock-solid case, your lawyer will strive to get you compensated for the entirety of your losses.  When confronted with irrefutable proof of both the extent of your losses and the depth of the insured’s liability, a sensible insurer might agree to a healthy settlement rather than risk a worse verdict at trial.   

Nevertheless, a battle-tested litigator will be indispensable if your case does go to trial, since plaintiffs who represent themselves in the courtroom lose about 96 percent of the time, whereas plaintiffs with professional representation win more often than not. 

What Will Retaining Professional Representation Cost? 

But what will retaining professional representation cost?  The answer is that you probably won’t owe anything up front because most personal injury attorneys, like the dedicated Fishers personal injury lawyers at Hensley Legal Group, work on a contingency basis.  Only when your case is favorably resolved will reimbursement be sought for out-of-pocket expenses and a fee for services rendered, generally as a percentage of your verdict or settlement. 

It is a mutually beneficial arrangement that can eliminate the initial worries associated with pursuing a case while incentivizing your Fishers personal injury attorney to get you the funds you need to become whole again. 

Reach Out to Our Fishers Personal Injury Lawyers 

Hensley Legal Group has been standing up for honest Hoosiers like you for more than 25 years.  If you have been badly hurt in the Fishers area through no fault of your own, reach out to our Fishers personal injury lawyers to learn about your legal options. 

You can call us at (317) 472-3333, chat with us online, or fill out our contact form to schedule a free consultation with an accomplished Fishers personal injury attorney now.