Survivor Justice Tax Prevention Act
- Sponsor
- Sen. Cortez Masto, Catherine [D-NV]
- Committees
- Finance Committee (primary)
- Last action
- Sep 15, 2026
Bottom line
The bill ensures that survivors of sexual assault do not pay federal income tax on compensatory damages received from legal settlements or decisions related to their claims, aiming to provide full financial relief.
What it actually does
This bill amends the Internal Revenue Code of 1986 to exclude from gross income any compensatory damages received on account of a sexual act or sexual contact, making these funds tax-free for survivors. It also establishes a specific burden of proof rule for these damages and mandates a public awareness program to inform survivors of this new exclusion.
Proponents argue
Supporters argue that taxing compensatory damages for sexual assault re-victimizes survivors by diminishing the financial relief intended to aid their recovery and healing. They contend that these funds are not income but restitution for profound personal harm, and should be treated as tax-exempt, similar to damages for physical injuries.
Opponents contend
While direct opposition to this specific measure is uncommon, potential critics might raise general concerns that expanding tax exclusions erodes the federal tax base, potentially complicating tax law and requiring higher taxes elsewhere or contributing to the national debt. However, the moral imperative of supporting survivors often outweighs such fiscal arguments for this particular exclusion.
The bill is very short and clearly written, making it highly accessible for a quick and comprehensive review by any interested reader.
Section 2(a), amending Section 104(a)(2) of the Internal Revenue Code of 1986
Tax Exclusion for Compensatory Damages from Sexual Assault Claims
This provision amends existing tax law to explicitly state that any damages, other than punitive damages, received on account of a sexual act or sexual contact are excluded from gross income. This means survivors receiving compensation for such claims will not have to pay federal income tax on those funds, regardless of whether there are observable physical injuries or medical records.
Supporters argue
Supporters argue that taxing these damages re-victimizes survivors by diminishing the financial relief intended to aid their recovery. They contend that these funds are not income but compensation for profound personal harm and should be treated similarly to physical injury damages, which are already tax-exempt.
Critics contend
While direct opposition to this specific exclusion is rare, some might generally argue that expanding tax exclusions narrows the tax base, potentially requiring higher taxes elsewhere or increasing the national debt. However, the specific moral weight of this exclusion makes direct opposition difficult.
Tradeoffs
The bill balances the goal of providing full financial relief to survivors against the general principle of maintaining a broad tax base for federal revenue.
Section 2(b), inserting new subsection (d) into Section 104 of the Internal Revenue Code
Streamlined Proof for Tax Exemption of Sexual Assault Damages
This provision establishes that if a legal decision or agreement explicitly states that damages received are on account of a sexual act or sexual contact, this statement will be treated as credible evidence for tax purposes. It also deems the taxpayer to have met the requirements for shifting the burden of proof to the IRS in such cases, simplifying the process for survivors to claim the tax exclusion.
Section 2(e)
Public Awareness Campaign for Tax Exclusion
This section directs the Secretary of the Treasury, in consultation with the Department of Justice Office on Violence Against Women and other relevant federal agencies, to conduct a program to promote public awareness of the new tax exclusion for sexual assault damages. This aims to ensure that eligible survivors and their legal representatives are aware of this change in tax law.
The bill defines "sexual act" and "sexual contact" by referencing existing definitions in federal criminal code (18 U.S.C. 2246). This ensures consistency with established legal terminology for these sensitive terms.
Section 2(a)(B) refers to "paragraph (2) of section 2246 of title 18, United States Code" and "paragraph (3) of such section"
Why it matters:This is standard legislative practice for maintaining consistency and avoiding redundancy in legal definitions across different federal statutes.
Case for: Using established definitions prevents ambiguity and ensures the tax exclusion applies to acts already recognized as sexual assault under federal law, promoting legal clarity and consistency.
Case against: A reader unfamiliar with 18 U.S.C. 2246 might not fully grasp the precise scope of the bill without looking up the referenced definitions, potentially leading to incomplete understanding.
Estimated impact: Ensures legal clarity and consistent application of the tax exclusion by precisely defining the scope of covered acts.
The amendments apply to amounts received from decisions made and agreements entered into after the date of enactment. It includes special rules: a decision is "made" after enactment if the first payment is received after that date, and an agreement is not "entered into" after enactment if it replaces, supersedes, or revises an agreement from before that date.
Section 2(c)
Why it matters:This is standard legislative practice to prevent retroactive application of new tax rules and to avoid manipulation of existing agreements solely for tax benefits.
Case for: Ensures a clear and fair cutoff for the new tax treatment, preventing retroactive tax changes and discouraging the renegotiation of old agreements solely for tax advantages.
Case against: Survivors whose agreements or decisions were finalized just before the enactment date, but whose payments might be ongoing, could miss out on the benefit, potentially creating a perceived inequity based on timing.
Estimated impact: Determines the precise start date for the tax exclusion, affecting which survivors are eligible for the benefit.