People often ask whether the compensation they may receive for a personal injury lawsuit is taxed. The answer is no. Why not? Because the injured victim is compensated for his or her loss or damage in an amount to make the victim whole; i.e., an amount that places the victim in the position he or she was in before the injury sustained. The compensation the victim received is not considered “gain” because the victim gained nothing and is merely being placed back in their pre-injury status.
Understanding this underlying principle is paramount when assuming the types of damages a victim may be entitled to in a personal injury lawsuit.
Under Arizona law, a victim of a personal injury is entitled to the full cost of his/her medical expenses, now and in the future, pain, discomfort, suffering, disability, disfigurement and anxiety already experienced and reasonably probable to be experienced in the future. These victims are also entitled to recover for loss of earnings to date, any decrease in earning power or capacity in the future as well as the loss of enjoyment of life (the participation in life’s activities to the quality and extent normally enjoyed before the injury).
Depending on the nature and extent of the injury, a victim may be entitled to loss of credit, loss of consortium (love, affection, intimacy, etc.). The damages are specific to the losses suffered by the victim and are still subject to the rigors of proof and must be causally related to the conduct of the wrongdoer.