Payments received from a workers' compensation plan are taxable.

Name: Payments received from a workers' compensation plan are taxable.
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Payments received from a workers' compensation plan are not taxable. They are considered to be compensation for an injury or illness, and thus are excluded from income tax. However, if a portion of the payment is for lost wages and is considered to be a substitute for regular income, that portion may be taxable.

Payments Received from a Workers' Compensation Plan Are Taxable