In April 2026, the House of Representatives cleared a bipartisan bill -- formally designated H.R. 2347 -- that would amend the federal tax code so that survivors of sexual abuse no longer owe federal income taxes on civil settlement proceeds from cases against their abusers. The legislation, pending Senate action, removes a financial disincentive that has long discouraged survivors from seeking accountability through the courts.
Reviewed by Survivor Justice Alliance · Updated 2026-07-06
H.R. 2347 passed the House in April 2026. Senate passage is the next step before survivors benefit from the explicit tax exclusion.
Under current federal tax law, compensation received in a lawsuit is generally excluded from taxable income only when it is paid for physical injuries or physical sickness under Section 104 of the Internal Revenue Code. Courts and the IRS have interpreted this provision to exclude settlements for sexual assault in some circumstances, but the application has been inconsistent, leaving many survivors uncertain whether their settlement proceeds will be taxed. The bipartisan House bill H.R. 2347 -- known informally as the Survivor Justice Tax Prevention measure -- would close that gap by explicitly amending the tax code to exclude civil settlement proceeds arising from sexual abuse from federal taxable income.
The measure was introduced by Representatives Lloyd Smucker (R-PA) and Gwen Moore (D-WI) and cleared the House in April 2026. The bipartisan nature of the legislation reflects a growing consensus in Congress that survivors who succeed in civil litigation should not face a federal tax bill as a consequence of doing so. The legislation responds to documented cases in which survivors received civil settlements and then discovered that a significant portion of their recovery was owed to the Internal Revenue Service, undermining the deterrent purpose of civil accountability and the compensatory purpose of the settlement itself.
This Alliance supports every development that strengthens civil accountability for survivors and removes barriers to pursuing it. The potential tax obligation on settlement proceeds has been an underreported disincentive for many survivors who consult with attorneys and weigh the costs and benefits of litigation. A civil case takes years, involves significant emotional labor, and produces uncertain outcomes. Learning that a settlement may itself be taxable adds another layer of burden. H.R. 2347 addresses that burden directly.
Civil litigation serves purposes that the criminal justice system cannot. Criminal prosecutions require proof beyond a reasonable doubt, are controlled by prosecutors rather than survivors, and often result in no charges even when the evidence of harm is substantial. Civil cases can be brought by survivors themselves, operate under a preponderance-of-the-evidence standard, and can reach institutional defendants -- employers, dioceses, universities, and other organizations -- that may bear responsibility for creating conditions in which abuse occurred. Settlement proceeds in civil cases represent compensation for harm: for medical costs, lost earnings, pain and suffering, and the long-term consequences of trauma.
Taxing that compensation has never been defensible on its merits. The proceeds are not investment income, salary, or profit -- they are recovery for injury. The inconsistent application of existing tax law to sexual abuse settlements has created a situation in which some survivors who file civil claims and succeed may ultimately receive less than they expected after accounting for a federal tax liability they did not anticipate. H.R. 2347 corrects that anomaly by making the exclusion explicit and predictable.
Survivors who are currently consulting with attorneys about whether to pursue a civil claim should understand that the legislation is not yet law -- it passed the House but must also pass the Senate before it takes effect. The current state of the law remains uncertain in many cases, and a qualified civil attorney can assess how the existing Section 104 framework applies to the specific facts of a particular claim. The Survivor Justice Alliance connects survivors with experienced civil attorneys at no cost and with no obligation.
The Senate's consideration of H.R. 2347 is the critical next step. Survivor advocacy organizations and civil rights groups have historically played an important role in moving legislation through the Senate by making visible the human impact of provisions that otherwise appear abstract. Survivors who have experience navigating a tax bill after a civil settlement, or who are currently weighing whether to pursue a civil claim in part because of uncertainty about tax treatment, may find it valuable to contact their senators in support of the legislation.
For survivors who are in the process of evaluating a civil claim, the tax treatment of potential proceeds is one factor among many to discuss with a qualified attorney. The more important questions typically involve the statute of limitations that applies to the specific claim, the identity of the institutional and individual defendants who may bear liability, the strength of the available evidence, and the realistic value of the claim given the applicable legal theories. The Survivor Justice Alliance exists to connect survivors with experienced civil attorneys who can provide that analysis for free and in confidence.
Any survivor who has not yet consulted with a civil attorney should not allow uncertainty about the tax treatment of a potential settlement to deter that conversation. A free, confidential consultation carries no obligation and is the only way to assess whether and how the civil justice system can respond to what happened. The National Sexual Assault Hotline (RAINN) is also available 24/7 at 800-656-4673 for any survivor who needs emotional support while making these decisions.
The tax treatment of civil settlement proceeds is more complicated than most survivors expect. Here is what matters most when evaluating the financial dimensions of a civil claim.
The Survivor Justice Alliance is an attorney alliance and advocacy organization, not a law firm; nothing here is legal advice. Attorney advertising. Referrals and consultations are free, and alliance attorneys work on contingency. Support is available 24/7 at the RAINN hotline, 800-656-4673.
The bill as drafted applies to future settlements. It is not retroactive. Survivors who received settlement proceeds in prior tax years and paid federal income tax on them would not automatically receive a refund under the current version of the legislation.
The Alliance is a national network of attorneys focused on survivor civil justice. Connecting with a member attorney through the Alliance is free, carries no obligation, and the consultation is confidential. Member attorneys typically work on contingency, meaning no attorney fee unless they recover for you.
Civil and criminal cases are separate proceedings. A civil claim can proceed even if the criminal system declined to prosecute, acquitted, or has already resolved the case. The standards of proof and the parties who control the case are fundamentally different.