Are Mesothelioma Settlements Taxable Income in 2025?
Mesothelioma settlements may or may not be taxable depending on what the money is awarded for. Within your settlement amount, there are various types of damages that each have their own tax requirements.
The IRS requires U.S. residents or citizens to pay taxes on their gross income, which includes wages, profits from investments, and all other forms of income.
However, compensation from a mesothelioma lawsuit “on account of personal physical injuries or physical sickness” is not considered gross income, according to IRS tax code 104 (a)(2).
“The key question to ask is: ‘What was the settlement […] intended to replace?’”
– Internal Revenue Service (IRS)
Generally, compensation meant to help with a patient’s medical bills or pain and suffering isn’t taxed. Payouts not directly related to an illness or injury, like punitive damages and interest, may be considered taxable income.
If you or a loved one has been diagnosed with mesothelioma, Sokolove Law may be able to help you get the most compensation possible from your claim. Get started now with a free consultation.
Since 1979, Sokolove Law has secured more than $5.2 Billion for thousands of mesothelioma victims and their families.
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Non-Taxable Mesothelioma Settlement Compensation
While some portions of a settlement may be taxable, some specific types of compensation are typically considered non-taxable by the IRS.
At Sokolove Law, our asbestos attorneys fight to maximize your potential mesothelioma settlement by securing compensation from every area that applies to your case.
Find out more about what’s taxed in a mesothelioma settlement and what’s not.
Compensatory Damages
Compensatory damages, also known as “actual damages,” are intended to pay mesothelioma patients for the harm they’ve suffered.
This type of compensation may take into account:
- A patient’s loss of income from being unable to work
- Any expenses directly related to their illness
- Emotional distress caused by a mesothelioma diagnosis
These damages may be awarded through a personal injury or wrongful death lawsuit, and since they seek to pay victims for a physical injury or illness, they’re typically not subject to taxes by the IRS.
In one mesothelioma case, the jury awarded a U.S. Navy veteran over $40 Million in compensatory damages against the defendant, Goodyear. Our client’s mesothelioma diagnosis completely changed his previously active lifestyle.
"I want people out there to realize that there’s help, and they can get assistance and a mesothelioma settlement from these manufacturers that continue to use asbestos while knowing it’s dangerous for people."
– Dee, Firm Client & Wife of a Mesothelioma Patient
Medical Bills
Medical treatment for mesothelioma can quickly add up to over $400,000 a year, and insurance may not cover all related expenses.
Settling a mesothelioma claim can help you get money for:
- Treatments like surgery, chemotherapy, and radiation
- Palliative care to ease symptoms and keep you comfortable
- In-home care, including visiting nurses and respite workers
- Travel costs to see mesothelioma specialists
You don’t have to pay taxes on any portion of a settlement awarded for your past, current, or future medical costs.
Our asbestos attorneys can estimate the total cost of all current and future medical expenses linked to mesothelioma, so you can get the compensation you need to battle this disease.
“We filed a mesothelioma lawsuit because we knew it was more than we could handle on our own. We came to realize it's not going to be a cheap fight. This fight's going to cost.”
– Alan, Firm Client & U.S. Army Veteran with Mesothelioma
Burial Expenses
Losing a loved one to mesothelioma is emotionally devastating and can bring about even more unexpected financial burdens. Burial expenses, which include funeral costs and cemetery fees, can add up quickly and reach thousands of dollars.
Filing an asbestos claim after the death of your loved one may allow your family to secure justice on their behalf and compensation that can help pay for their funeral.
Any compensation awarded to families for burial expenses and other costs isn’t taxable by the IRS
Lost Wages
If you’re unable to work due to mesothelioma, you may be awarded additional payment for lost wages. Mesothelioma compensation for lost wages is not taxable.
Compensation for wages is excluded from your gross income if “a personal physical injury caused such a loss,” according to the IRS.
The financial burden of mesothelioma can add up quickly, especially when you’re not earning an income. Getting legal help for mesothelioma can allow you to secure your family’s financial situation during this difficult time.
“I called my union rep and told him, ‘I’ve been told I can’t work again, I have mesothelioma.’ And he said to me, ‘Did you call that number on TV? They help victims like yourself get benefits.’ In two days, the lawyers were at my house.”
– Dennis, Firm Client & Mesothelioma Patient
Taxable Asbestos Settlement Payouts
While the primary purpose of mesothelioma compensation is to provide financial support for medical treatment, lost income, and other related costs, any additional funds awarded may be subject to taxes by the IRS.
Understanding which parts of your mesothelioma settlement may be taxable is key to ensuring you correctly report your income to the IRS.
Punitive Damages
If your case goes to trial, a judge or jury may award you punitive damages as part of your mesothelioma verdict. Punitive damages “are always taxable, even if your injuries are 100 percent physical,” according to the American Bar Association.
This form of compensation is intended to punish asbestos-related companies that knowingly put people in harm’s way or acted recklessly.
“In my opinion, filing a claim is worth it. These companies knowingly submitted workers to years of exposure and caused their deaths. They’ve been making profits for too long at the expense of human suffering.”
– Señora L., Firm Client & Wife of a Mesothelioma Patient
Punitive damages made up 52% of the compensation awarded in 2019 mesothelioma trial verdicts where permitted, according to National Economic Research Associates.
Compensation from punitive damages should be reported as “other income” when filing your taxes.
Interest
While a mesothelioma settlement is being processed, any interest that it accumulates could be taxed.
The IRS notes that “interest on any settlement is generally taxable” and should be included in your taxable income.
There are two types of interest:
- Pre-judgment interest begins to accumulate when your lawsuit is filed until a settlement amount is reached.
- Post-judgment interest can then build upon these damages from the time the settlement is determined until it’s actually paid out.
Interest rates and how they’re calculated may vary depending on the state where your lawsuit is filed.
Call (800) 647-3434 now for help seeking compensation after a mesothelioma diagnosis. It costs nothing to speak with us.
Taxes on Other Types of Mesothelioma Compensation
Filing a lawsuit isn’t the only way to get financial support for mesothelioma. In some cases, you may be able to secure payouts from trust fund claims and monthly benefits from the Department of Veterans Affairs (VA).
Find out more about taxes on other types of asbestos compensation below.
Asbestos Trust Funds
Asbestos-related companies that filed for bankruptcy were ordered to put compensation in trust funds for current and future mesothelioma victims.
An estimated $30 Billion is still available in asbestos trust funds for mesothelioma patients and their families.
Similarly to compensatory damages, trust fund payments are not taxable since they are considered compensation for personal injuries.
At Sokolove Law, we can help you pursue compensation from all of the trust funds you qualify for — often from the comfort of your own home.
VA Benefits for Mesothelioma
Veterans with mesothelioma and their loved ones may be eligible for monthly, tax-free payments from the VA in addition to other benefits.
Benefits for veterans with mesothelioma include:
- Aid and Attendance (A&A)
- Disability compensation
- Health care
- Housebound benefits
- Special Monthly Compensation (SMC)
- VA pensions
Due to the severity of this cancer, the VA awards veterans with mesothelioma a 100% disability rating, making them eligible for the most compensation possible.
This rating allows veterans with mesothelioma to receive $3,831.30 a month in disability compensation. More money may be available to veterans with spouses and dependent children.
Since 1979, Sokolove Law has secured over $5.2 Billion for thousands of mesothelioma victims and their families.
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John & Dee Sokolove Law ClientsSokolove Law: Securing Mesothelioma Settlements Nationwide
As an established national asbestos law firm, Sokolove Law can help families in all 50 states pursue mesothelioma settlements.
Over the last 45+ years, we’ve secured more than $5.2 Billion for mesothelioma patients and their loved ones.
There are no upfront costs or hourly fees to work with our asbestos lawyers. We only get paid if your case results in compensation.
Call (800) 647-3434 now or fill out our contact form to get started with a free, no-obligation case review.
Mesothelioma Lawsuit Settlement Taxable FAQs
Is asbestos compensation taxable?
Asbestos compensation may not be subject to taxes if payouts are awarded for personal injuries. However, some exceptions may apply, like in the rare event of your case not settling and going to trial instead.
Find out about which types of asbestos compensation are taxed:
- Asbestos trust fund payouts aren't taxed
- Settlement payments for medical bills, lost wages, and other compensatory damages aren't taxed, though any interest that accumulates is
- Punitive damages awarded in jury verdicts are taxed.
- Monthly VA disability benefits from the U.S. Department of Veterans Affairs aren’t taxed
At Sokolove Law, we can help families pursue asbestos compensation from all of the options available to them. See if you may qualify now with a free case review.
What is the average payout for asbestos claims?
On average, asbestos claims for mesothelioma pay out $1 Million to $11.4 Million, depending on whether the case results in a settlement or trial verdict.
Over the last 45 years, our firm has secured over $5.2 Billion for families impacted by mesothelioma.
Call (800) 647-3434 now. We'll fight hard to get you everything you're entitled to.
Is an asbestos settlement taxable income?
Asbestos settlements are generally not considered taxable income because they’re awarded for a personal injury or illness. On the other hand, punitive damages from a jury verdict are subject to taxes.
Every case is unique, so it’s important to work with an experienced asbestos attorney who can help you understand your options and maximize the potential payout you may receive.
Are asbestos trust payouts taxable?
Payouts from asbestos trust funds aren’t considered taxable income because the compensation is awarded for personal injuries like mesothelioma or lung cancer.
These trusts have paid out billions of dollars to families across the country, including more than $5 Billion from the Johns Manville trust alone.
How long does it take to get asbestos money?
While the payout timeline may vary from case to case, many of our clients start receiving compensation from asbestos claims in as few as 90 days after contacting us.
We know how important this money can be for medical care and other expenses, which is why we work hard to get you the compensation you need as quickly as possible.
How much does it cost to pursue money for mesothelioma?
When you work with Sokolove Law, there are no upfront costs or hourly fees to pursue money for mesothelioma.
Our asbestos attorneys work on a contingency-fee basis, which means you pay nothing unless we secure compensation for your family.
