Are Medical Malpractice Settlements Taxable in Massachusetts?

No. As is the case with auto accident, slip and fall, dog bite, and all other personal injury settlements, medical malpractice settlements are not taxable in Massachusetts. The reason such settlements are not taxable is because they are intended to put the injury victim in the position they were in before the accident. Receiving a settlement is not a taxable event because there is no “gain” because the injury victim is “made whole” through the settlement. However, settlements for emotional distress, as well as punitive damage awards, are in fact taxable.