No, in most cases, the state and the federal government will not tax you on the settlement you received for your personal injury lawsuit.
According to the Pennsylvania Department of Revenue, compensation that is excluded from taxation includes the following:
Public assistance or unemployment compensation
Periodic payments for disability and sickness outside of regular wages
Compensation that is used to reimburse actual expenses
Retirement benefits after an individual has reached a certain age or length of employment
Income received for active military duty or State duty for emergency outside of the Commonwealth of Pennsylvania
Disability, retirement, workers’ compensation, and other funds paid for occupational diseases
Injury settlement questions can often involve complex legal issues. Contact a lawyer for advice and guidance if you had any questions about what your case might be worth.