US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 104

Compensation for injuries or sickness

(a)

In general

Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include—
(1)
amounts received under workmen’s compensation acts as compensation for personal injuries or sickness;
(2)
the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness;
(3)
amounts received through accident or health insurance (or through an arrangement having the effect of accident or health insurance) for personal injuries or sickness (other than amounts received by an employee, to the extent such amounts (A) are attributable to contributions by the employer which were not includible in the gross income of the employee, or (B) are paid by the employer);
(4)
amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the Coast and Geodetic Survey or the Public Health Service, or as a disability annuity payable under the provisions of section 808 of the Foreign Service Act of 1980;
(5)
amounts received by an individual as disability income attributable to injuries incurred as a direct result of a terroristic or military action (as defined in section 692(c)(2)); and
(6)
amounts received pursuant to—
(A)
42 U.S.C. 37961
1 See References in Text note below.
section 1201 of the Omnibus Crime Control and Safe Streets Act of 1968 ();  or
(B)
a program established under the laws of any State which provides monetary compensation for surviving dependents of a public safety officer who has died as the direct and proximate result of a personal injury sustained in the line of duty,
except that subparagraph (B) shall not apply to any amounts that would have been payable if death of the public safety officer had occurred other than as the direct and proximate result of a personal injury sustained in the line of duty.
For purposes of paragraph (3), in the case of an individual who is, or has been, an employee within the meaning of section 401(c)(1) (relating to self-employed individuals), contributions made on behalf of such individual while he was such an employee to a trust described in section 401(a) which is exempt from tax under section 501(a), or under a plan described in section 403(a), shall, to the extent allowed as deductions under section 404, be treated as contributions by the employer which were not includible in the gross income of the employee. For purposes of paragraph (2), emotional distress shall not be treated as a physical injury or physical sickness. The preceding sentence shall not apply to an amount of damages not in excess of the amount paid for medical care (described in subparagraph (A) or (B) of section 213(d)(1)) attributable to emotional distress.
(b)

Termination of application of subsection (a)(4) in certain cases

(1)

In general

Subsection (a)(4) shall not apply in the case of any individual who is not described in paragraph (2).

(2)

Individuals to whom subsection (a)(4) continues to apply

An individual is described in this paragraph if—
(A)
on or before , he was entitled to receive any amount described in subsection (a)(4),
(B)
on , he was a member of any organization (or reserve component thereof) referred to in subsection (a)(4) or under a binding written commitment to become such a member,
(C)
he receives an amount described in subsection (a)(4) by reason of a combat-related injury, or
(D)
on application therefor, he would be entitled to receive disability compensation from the Department of Veterans Affairs.
(3)

Special rules for combat-related injuries

For purposes of this subsection, the term “combat-related injury” means personal injury or sickness—
(A)
which is incurred—
(i)
as a direct result of armed conflict,
(ii)
while engaged in extrahazardous service, or
(iii)
under conditions simulating war; or
(B)
which is caused by an instrumentality of war.
In the case of an individual who is not described in subparagraph (A) or (B) of paragraph (2), except as provided in paragraph (4), the only amounts taken into account under subsection (a)(4) shall be the amounts which he receives by reason of a combat-related injury.
(4)

Amount excluded to be not less than veterans’ disability compensation

In the case of any individual described in paragraph (2), the amounts excludable under subsection (a)(4) for any period with respect to any individual shall not be less than the maximum amount which such individual, on application therefor, would be entitled to receive as disability compensation from the Veterans’ Administration.

(c)

Application of prior law in certain cases

The phrase “(other than punitive damages)” shall not apply to punitive damages awarded in a civil action—
(1)
which is a wrongful death action, and
(2)
with respect to which applicable State law (as in effect on and without regard to any modification after such date) provides, or has been construed to provide by a court of competent jurisdiction pursuant to a decision issued on or before , that only punitive damages may be awarded in such an action.
This subsection shall cease to apply to any civil action filed on or after the first date on which the applicable State law ceases to provide (or is no longer construed to provide) the treatment described in paragraph (2).
(d)

Cross references

(1)
For exclusion from employee’s gross income of employer contributions to accident and health plans, see section 106.
(2)
section 1403 of title 10 For exclusion of part of disability retirement pay from the application of subsection (a)(4) of this section, see , United States Code (relating to career compensation laws).

Aug. 16, 1954, ch. 73668A Stat. 30Pub. L. 86–723, § 5174 Stat. 847Pub. L. 87–792, § 7(d)76 Stat. 829Pub. L. 94–455, title V, § 505(b)90 Stat. 1567Pub. L. 96–465, title II, § 2206(e)(1)94 Stat. 2162Pub. L. 97–473, title I, § 101(a)96 Stat. 2605Pub. L. 101–239, title VII, § 7641(a)103 Stat. 2379Pub. L. 104–188, title I, § 1605(a)110 Stat. 1838Pub. L. 104–191, title III, § 311(b)110 Stat. 2053Pub. L. 107–134, title I, § 113(a)115 Stat. 2435Pub. L. 114–14, § 2129 Stat. 198Pub. L. 115–141, div. U, title IV, § 401(a)(2)(A)132 Stat. 1184(, ; , , ; , , ; , (e)(1), title XIX, § 1901(a)(18), , , 1568, 1766; , , ; , , ; , , ; –(c), , ; , , ; , , ; , , ; , , .)

Editorial Notes

References in Text

Pub. L. 96–465, title I, § 80894 Stat. 2110section 4048 of Title 22Section 808 of the Foreign Service Act of 1980, referred to in subsec. (a)(4), is , , , which is classified to , Foreign Relations and Intercourse.

section 3796 of Title 42section 10281 of Title 34Section 1201 of the Omnibus Crime Control and Safe Streets Act of 1968, referred to in subsec. (a)(6)(A), was classified to , The Public Health and Welfare, prior to editorial reclassification and renumbering as , Crime Control and Law Enforcement.

Amendments

Pub. L. 115–1412018—Subsec. (b)(2)(D). substituted “Department of Veterans Affairs” for “Veterans’ Administration”.

Pub. L. 114–142015—Subsec. (a)(6). added par. (6).

Pub. L. 107–1342002—Subsec. (a)(5). substituted “a terroristic or military action (as defined in section 692(c)(2)).” for “a violent attack which the Secretary of State determines to be a terrorist attack and which occurred while such individual was an employee of the United States engaged in the performance of his official duties outside the United States.”

Pub. L. 104–188, § 1605(b)1996—Subsec. (a). , in closing provisions, substituted “For purposes of paragraph (2), emotional distress shall not be treated as a physical injury or physical sickness. The preceding sentence shall not apply to an amount of damages not in excess of the amount paid for medical care (described in subparagraph (A) or (B) of section 213(d)(1)) attributable to emotional distress.” for “Paragraph (2) shall not apply to any punitive damages in connection with a case not involving physical injury or physical sickness.”

Pub. L. 104–188, § 1605(a)Subsec. (a)(2). , amended par. (2) generally. Prior to amendment, par. (2) read as follows: “the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness;”.

Pub. L. 104–191Subsec. (a)(3). inserted “(or through an arrangement having the effect of accident or health insurance)” after “accident or health insurance”.

Pub. L. 104–188, § 1605(c)Subsecs. (c), (d). , added subsec. (c) and redesignated former subsec. (c) as (d).

Pub. L. 101–2391989—Subsec. (a). inserted at end “Paragraph (2) shall not apply to any punitive damages in connection with a case not involving physical injury or physical sickness.”

Pub. L. 97–4731983—Subsec. (a)(2). substituted “whether by suit or agreement and whether as lump sums or as periodic payments” for “whether by suit or agreement”.

Pub. L. 96–4651980—Subsec. (a)(4). substituted reference to section 808 of the Foreign Service Act of 1980 for reference to section 831 of the Foreign Service Act of 1946.

Pub. L. 94–455, § 1901(a)(18)(A)60 Stat. 102122 U.S.C. 10811976—Subsec. (a)(4). , struck out “; ” after “(”.

Pub. L. 94–455, § 505(e)(1)Subsec. (a)(5). , added par. (5).

Pub. L. 94–455, § 505(b)37 U.S.C. 272(h)Subsecs. (b), (c). , added subsec. (b), redesignated former subsec. (b) as (c) and, as so redesignated, § 1901(a)(18)(B), substituted “1403 of title 10, United States Code (relating to career compensation laws)” for “402(h) of the Career Compensation Act of 1949 ()”.

Pub. L. 87–7921962—Subsec. (a). inserted sentence requiring contributions made on behalf of an individual who is, or has been, an employee within the meaning of section 401(c)(1), while he was such an employee to a trust which is exempt from tax, or under a plan described in section 403(a), to be treated as contributions by the employer which were not includible in the gross income of the employee.

Pub. L. 86–7231960—Subsec. (a)(4). provided for exclusion from gross income of amounts received as a disability annuity payable under the provisions of section 831 of the Foreign Service Act of 1946, as amended.

Statutory Notes and Related Subsidiaries

Change of Name

section 10 of Pub. L. 100–527section 301 of Title 38Reference to Veterans’ Administration deemed to refer to Department of Veterans Affairs pursuant to , set out as a Department of Veterans Affairs Act note under , Veterans’ Benefits.

section 3508 of Title 20Secretary of Health, Education, and Welfare redesignated Secretary of Health and Human Services by , Education.

Effective Date of 2002 Amendment

Pub. L. 107–134, title I, § 113(c)115 Stat. 2435

section 692 of this title“The amendments made by this section [amending this section and ] shall apply to taxable years ending on or after .”
, , , provided that:

Effective Date of 1996 Amendment

Pub. L. 104–191, title III, § 311(c)110 Stat. 2053

section 162 of this title“The amendments made by this section [amending this section and ] shall apply to taxable years beginning after .”
, , , provided that:

Pub. L. 104–188, title I, § 1605(d)110 Stat. 1839

“(1)

In general .—

Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to amounts received after the date of the enactment of this Act [], in taxable years ending after such date.
“(2)

Exception .—

The amendments made by this section shall not apply to any amount received under a written binding agreement, court decree, or mediation award in effect on (or issued on or before) .”
, , , provided that:

Effective Date of 1989 Amendment

Pub. L. 101–239, title VII, § 7641(b)103 Stat. 2379

“(1)

In general .—

Except as provided in paragraph (2), the amendment made by subsection (a) [amending this section] shall apply to amounts received after , in taxable years ending after such date.
“(2)

Exception .—

The amendment made by subsection (a) shall not apply to any amount received—
“(A)
under any written binding agreement, court decree, or mediation award in effect on (or issued on or before) , or
“(B)
pursuant to any suit filed on or before .”
, , , provided that:

Effective Date of 1980 Amendment

Pub. L. 96–465section 2403 of Pub. L. 96–465section 3901 of Title 22Amendment by effective , except as otherwise provided, see , set out as an Effective Date note under , Foreign Relations and Intercourse.

Effective Date of 1976 Amendment

section 505(b) of Pub. L. 94–455section 508 of Pub. L. 94–455section 3 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Pub. L. 94–455, title V, § 505(e)(2)90 Stat. 1568

“The amendments made by this subsection [amending this section] shall apply to taxable years beginning after .”
, , , provided that:

section 1901(a)(18)(A) of Pub. L. 94–455section 1901(d) of Pub. L. 94–455section 2 of this titleAmendment by applicable with respect to taxable years beginning after , see , set out as a note under .

Effective Date of 1962 Amendment

Pub. L. 87–792section 8 of Pub. L. 87–792section 22 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 1960 Amendment

Pub. L. 86–723, § 56(e)74 Stat. 848

“The amendment made by section 51 of this Act [amending this section] shall be effective with respect to taxable years ending after the date of enactment of this Act [].”
, , , provided that:

Executive Documents

Change of Name

79 Stat. 131884 Stat. 2090section 311 of Title 15Coast and Geodetic Survey consolidated with National Weather Bureau in 1965 to form Environmental Science Services Administration by Reorg. Plan No. 2 of 1965, eff. , 30 FR 8819, . Environmental Science Services Administration abolished in 1970 and its personnel, property, records, etc., transferred to National Oceanic and Atmospheric Administration by Reorg. Plan No. 4 of 1970, eff. , 35 FR 15627, . By order of Acting Associate Administrator of National Oceanic and Atmospheric Administration, 35 FR 19249, , Coast and Geodetic Survey redesignated National Ocean Survey. See notes under , Commerce and Trade.

Transfer of Functions

80 Stat. 1610Functions of Public Health Service, Surgeon General of Public Health Service, and all other officers and employees of Public Health Service, and functions of all agencies of or in Public Health Service transferred to Secretary of Health, Education, and Welfare by 1966 Reorg. Plan No. 3, 31 F.R. 8855, , effective , set out in the Appendix to Title 5, Government Organization and Employees.