Unfortuantely, a monetary award of this tyupe is considered income by the IRS.  When someone is physically injured and gets a money award from settlemenet or trial, that money is not taxable.  The key words here are “physical injury.”  Emotional distress is not cosidered a physical injury and, of course, discrimination is not physical.  Therefore, the award is taxable as income.  Sometimes a non-physical cause of action, such as discrimination in the workplace, is accompanied by a physical harm. For instance, if the boss shoves the employee, this is a physical assault.  Thus a jury can award a certain amount for the assault and another amount for the discrinimation.  In this case the assault portion would not have been taxable.