Yes, settlement for wrongful termination is taxable income.

See Are legal settlements taxable?

https://ttlc.intuit.com/questions/2899059-are-legal-settlements-taxable

i received two checks from a wrongful termination-one check was from back wages and taxes were taken out of that-the second one is 16,875 for non-economic damages including emotional distress. i do not work and live on social security earning only. I was told I would be sent  a Form 1099 for the second check. What percentage of the $16,875 will i be taxed?

It is not taxed in a vacuum ... it is added to your other income so it can be taxed anywhere from zero % to 35%. 

But only the amount over your Standard Deduction is taxed.  

For 2021 the standard deduction amounts are:

Single 12,550 + 1,700 for 65 and over or blind (14,250)

HOH 18,800 + 1,700 for 65 and over or blind

Joint 25,100 + 1,350 for each 65 and over or blind

Married filing Separate 12,550 + 1,350 for 65 and over or blind