SEC. 2. EXEMPTING FROM FEDERAL INCOME TAXATION 
PAYMENTS ALLOCABLE TO SEXUAL ASSAULT 
OR SEXUAL HARASSMENT CLAIMS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting before section 140 the following new section: 
‘‘SEC. 139J. AMOUNTS RECEIVED AS JUDGMENTS, AWARDS, 
AND SETTLEMENTS WITH RESPECT TO SEX-
UAL 
ASSAULT 
OR 
SEXUAL 
HARASSMENT 
CLAIMS. 
‘‘Gross income shall not include any amount received 
in connection with a claim of unlawful discrimination (as 
defined in section 62(e)) (whether by lump sum or periodic 
payments) as a judgment, award, or settlement (including 
backpay, frontpay, punitive damages, or any payments 
made in connection with a release of claims or to resolve, 
settle, or litigate claims) from— 
‘‘(1) a dispute involving an alleged nonconsen-
sual sexual act or sexual contact, as such terms are 
defined in section 2246 of title 18, United States 
Code, or similar applicable Tribal or State law, in-
cluding when the victim lacks capacity to consent, or 
‘‘(2) a dispute relating to conduct that is al-
leged to constitute sexual harassment under applica-
ble Federal, Tribal, or State law.’’. 
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(b) SOCIAL SECURITY TAXES.—Section 3121(a) of 
such Code is amended by striking ‘‘or’’ at the end of para-
graph (22), by striking the period at the end of paragraph 
(23) and inserting ‘‘; or’’, and by inserting after para-
graph (23) the following new paragraph: 
‘‘(24) any amount received which is excludable 
from the gross income of the employee under section 
139J.’’. 
(c) RAILROAD RETIREMENT TAX.—Section 3231(e) 
of such Code is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(13) AMOUNTS
RECEIVED
AS
JUDGMENTS, 
AWARDS, AND
SETTLEMENTS
WITH
RESPECT
TO 
SEXUAL
ASSAULT
OR
SEXUAL
HARASSMENT 
CLAIMS.—The term ‘compensation’ shall not include 
any amount received which is excludable from the 
gross income of the employee under section 139J.’’. 
(d) UNEMPLOYMENT TAXES.—Section 3306(b) of 
such Code is amended by striking ‘‘or’’ at the end of para-
graph (19), by striking the period at the end of paragraph 
(20) and inserting ‘‘, or’’, and by inserting after para-
graph (20) the following new paragraph: 
‘‘(21) any amount received which is excludable 
from the gross income of the employee under section 
139J.’’. 
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(e) WAGE WITHHOLDING.—Section 3401 of such 
Code is amended by striking ‘‘or’’ at the end of paragraph 
(22), by striking the period at the end of paragraph (23) 
and inserting ‘‘, or’’, and by inserting after paragraph 
(23) the following new paragraph: 
‘‘(24) any amount received which is excludable 
from the gross income of the employee under section 
139J.’’. 
(f) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1 of the Internal 
Revenue Code of 1986 is amended by inserting before the 
item relating to section 140 the following new item: 
‘‘Sec. 139J. Amounts received as judgments, awards, and settlements with re-
spect to sexual assault or sexual harassment claims.’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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