It is NOT taxable income for any purpose.
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Here is a link to Internal Revenue Code 104(a)(1) which states that your workers compensation payments are not taxable. http://www.law.cornell.edu/uscode/text/26/104
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No, but be careful if you are also getting Social Security Disability Income or some retirement benefits.
According to the IRS' Publication 525 (2013), "amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. The exemption also applies to your survivors. The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury.
If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable."
Always consult an accountant if there are other sources of income that are either offset by your workers compensation settlement or adjusted as a result of that settlement.