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Settlements due to physical injury or illness are not taxable. If any part of the settlement is earmarked for interest, lost wages or punitive damages that portion is taxable.
There would be little doubt that this is a settlement due to physical injury so it would not be taxable.
And to the snotty little witch above: I hope you never have to go through that. Sadly it can't be taken back so money is the only way to settle the score. All of the folks who went through that would rather that it never happened in the first place.
Yes, all of the money is subject to taxation, even though the money was disbursed by a tax exempt entity.
It's all about the money, isn't it?
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