Senators Todd Young, Republican of Indiana, and Catherine Cortez Masto, Democrat of Nevada, announced a bipartisan effort to change the federal tax treatment of settlements awarded to survivors of sexual assault. The legislation, titled the Survivor Justice Tax Prevention Act, would allow qualifying damages from sexual assault cases to be excluded from taxable income, with the exception of punitive damages.
How the bill would work
Under the proposal, a survivor could use a court decision or settlement agreement as proof that the money received was directly tied to sexual acts or sexual contact. This evidence would qualify the compensation for the tax exclusion, even when the survivor cannot demonstrate a visible physical injury. The bill is designed to address the current gap in the tax code that forces victims to pay income tax on compensation meant to compensate for trauma and loss.
Legislative progress
The measure has already cleared the U.S. House of Representatives. On April 27, the House passed H.R. 2347, the Survivor Justice Tax Prevention Act, by voice vote. The Senate received the bill the following day and placed it on the legislative calendar in July, signaling readiness for further debate.
In the House, the companion bill was introduced by Representative Lloyd Smucker, Republican of Pennsylvania, and Representative Gwen Moore, Democrat of Wisconsin, underscoring the bipartisan support for the initiative.
Supporters’ perspective
Senator Young emphasized that the legislation would remove an additional financial burden for people who pursue legal action against their abusers. “Survivors should not have to choose between seeking justice and paying taxes on the compensation they earn,” he said.
Senator Cortez Masto added that the bill reflects a commitment to fairness and compassion in the tax system, noting that many survivors already face significant emotional and financial challenges.
Potential impact
If enacted, the law would allow survivors to keep more of the money awarded to them, providing greater financial stability for those rebuilding their lives. By excluding compensatory damages tied to sexual acts or contact from gross income, the bill aligns tax policy with the principle that victims should not be further penalized for the crimes committed against them.
The legislation does not affect punitive damages, which remain taxable. This distinction preserves the government’s ability to collect taxes on awards intended to punish wrongdoing, while still offering relief to victims.
Next steps
The bill now awaits Senate debate and a vote. Advocates for survivors are urging senators to move quickly, citing the urgent need for relief. If the Senate passes the measure and the President signs it into law, the change would take effect for future settlement payments.
Stakeholders, including survivor advocacy groups and tax policy experts, have praised the bipartisan effort as a meaningful step toward addressing a long‑standing inequity in the tax code.
Original reporting: WOWO News/Talk (Fort Wayne) — read the source article.
