Are wrongful death damages taxable?

In North Carolina, wrongful death damages are not taxable. The North Carolina General Statutes provide that no portion of any funds recovered or collected in a wrongful death claim is subject to taxation. This means that any money an estate, heirs, or beneficiaries receive through a wrongful death action is not subject to state or federal income taxes. Furthermore, North Carolina also provides that any money awarded to the wrongful death victims may be excluded from the calculation of public assistance benefits. This means that even if the estate or heirs receive a large sum of money from a wrongful death settlement, this money should not be seen as income when calculating benefits from government assistance programs such as Disability or Social Security. Wrongful death cases differ from other types of civil cases, in that the damages awarded are not meant to be punitive, but rather to compensate the victims for any emotional and financial losses they have suffered as a result of the death. This is why money awarded in a wrongful death case is not taxable in North Carolina.

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