Yes, only payments made as part of a physical injury or sickness settlement is not taxed.
To report:
Sign in to TurboTax and select the Take me to my return
button on the main screen.
Type “lawsuit settlement” in the Search box and then select
the “Jump to” link.
Answer Yes to the question Any Other Taxable Income?
Enter a brief description and the amount you received and
click Continue.
https://ttlc.intuit.com/replies/4787698
