Law Suit Settlement

[Moraga51]

If I receive a legal settlement for a personal injury suit, are the proceeds taxable as income for either/or Federal or state (Massachusetts). 
Thanks. 

[Anonymous]

Settlements are taxed or not according to the type of income they represent.  For example, a settlement for unpaid wages is taxed like wages.   Settlements for physical injury are not taxed.  Settlements for emotional distress are not taxed if the emotional distress was related to a physical injury, but are taxed if the injury was purely emotional.  Punitive damages and interest are taxable.  A settlement for physical damages to property is taxable if it exceeds your original cost to purchase the property.  

Settlements for physical injury are not taxed.

This IRS FAQ provides a good overview of this issue.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/legal-issues/legal-settlements-taxable/L...