It depends on the nature of your legal settlement. According to HR 5863, In general.--The term ``qualified wildfire relief payment'' means any amount received by or on behalf of an individual as compensation for losses, expenses, or damages (including compensation for additional living expenses, lost wages (other than compensation for lost wages paid by the employer which would have otherwise paid such wages), personal injury, death, or emotional distress) incurred as a result of a qualified wildfire disaster, but only to the extent the losses, expenses, or damages compensated by such payment are not compensated for by insurance or otherwise.
Furthermore, this applies to payments received by the individual during taxable years beginning after December 31, 2019, and before January 1, 2026.
HR 5863
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