I.R.C. § 104(a) In General —
Except in the case of amounts attributable to (and not in excess of) deductions
allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does
not include—
I.R.C. § 104(a)(1) —
amounts received under workmen's compensation acts as compensation for personal injuries
or sickness;
I.R.C. § 104(a)(2) —
the amount of any damages (other than punitive damages) received (whether by suit
or agreement and whether as lump sums or as periodic payments) on account of personal
physical injuries or physical sickness;
I.R.C. § 104(a)(3) —
amounts received through accident or health insurance (or through an arrangement
having the effect of accident or health insurance) for personal injuries or sickness
(other than amounts received by an employee, to the extent such amounts
(A) are attributable to contributions by the employer which were not includible in
the gross income of the employee, or (B) are paid by the employer);
I.R.C. § 104(a)(4) —
amounts received as a pension, annuity, or similar allowance for personal injuries
or sickness resulting from active service in the armed forces of any country or in
the Coast and Geodetic Survey or the Public Health Service, or as a disability annuity
payable under the provisions of section 808 of the Foreign Service Act of 1980;
I.R.C. § 104(a)(5) —
amounts received by an individual as disability income attributable to injuries incurred
as a direct result of a terroristic or military action (as defined in section 692(c)(2)); and
I.R.C. § 104(a)(6) —
amounts received pursuant to—
I.R.C. § 104(a)(6)(A) —
section 1201 of the Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 3796); or
I.R.C. § 104(a)(6)(B) —
a program established under the laws of any State which provides monetary compensation
for surviving dependents of a public safety officer who has died as the direct and
proximate result of a personal injury sustained in the line of duty,
except that subparagraph (B) shall not apply to any amounts that would have been payable if death of the public
safety officer had occurred other than as the direct and proximate result of a personal
injury sustained in the line of duty.
For purposes of paragraph (3), in the case of an individual who is, or has been, an employee within the meaning
of section 401(c)(1) (relating to self-employed individuals), contributions made on behalf of such individual
while he was such an employee to a trust described in section 401(a) which is exempt from tax under section 501(a), or under a plan described in section 403(a), shall, to the extent allowed as deductions under section 404, be treated as contributions by the employer which were not includible in the gross
income of the employee. For purposes of paragraph (2), emotional distress
shall not be treated as a physical injury or physical sickness. The
preceding sentence shall not apply to an amount of damages not in excess of the amount
paid for medical care (described in subparagraph (A) or (B) of section 213(d)(1)) attributable to emotional distress.
I.R.C. § 104(b) Termination Of Application Of Subsection (a)(4) In Certain Cases
I.R.C. § 104(b)(1) In General —
Subsection (a)(4) shall not apply in the case of any individual who is not described in paragraph
(2).
I.R.C. § 104(b)(2) Individuals To Whom Subsection (a)(4) Continues To Apply —
An individual is described in this paragraph if—
I.R.C. § 104(b)(2)(A) —
on or before September 24, 1975, he was entitled to receive any amount described
in subsection (a)(4),
I.R.C. § 104(b)(2)(B) —
on September 24, 1975, he was a member of any organization (or reserve component
thereof) referred to in subsection (a)(4) or under a binding written commitment to become such a member,
I.R.C. § 104(b)(2)(C) —
he receives an amount described in subsection (a)(4) by
reason of a combat-related injury, or
I.R.C. § 104(b)(2)(D) —
on application therefor, he would be entitled to receive disability compensation
from the Department of Veterans Affairs.
I.R.C. § 104(b)(3) Special Rules For Combat-Related Injuries —
For purposes of this subsection, the term “combat-related injury” means
personal injury or sickness—
I.R.C. § 104(b)(3)(A) —
which is incurred—
I.R.C. § 104(b)(3)(A)(i) —
as a direct result of armed conflict,
I.R.C. § 104(b)(3)(A)(ii) —
while engaged in extrahazardous service, or
I.R.C. § 104(b)(3)(A)(iii) —
under conditions simulating war;
or
I.R.C. § 104(b)(3)(B) —
which is caused by an instrumentality of war.
In the case of an individual who is not described in
subparagraph (A) or (B) of paragraph (2), except as provided in paragraph (4), the only amounts taken into account under subsection (a)(4) shall be the amounts which he receives by reason of a combat-related injury.
I.R.C. § 104(b)(4) Amount Excluded To Be Not Less Than Veterans' Disability Compensation —
In the case of any individual described in paragraph (2), the amounts excludable under subsection (a)(4) for any period with respect to any individual shall not be less than the maximum
amount which such individual, on application therefor, would be entitled to receive
as disability compensation from the Veterans' Administration.
I.R.C. § 104(c) Application Of Prior Law In Certain Cases —
The phrase “(other than punitive damages)”
shall not apply to punitive damages awarded in a civil action—
I.R.C. § 104(c)(1) —
which is a wrongful death action, and
I.R.C. § 104(c)(2) —
with respect to which applicable State law (as in effect on September 13, 1995 and
without regard to any modification after such date) provides, or has been construed
to provide by a court of competent jurisdiction pursuant to a decision issued on
or before September 13, 1995, that only punitive damages may be awarded in such an
action.
This subsection shall cease to apply
to any civil action filed on or after the first date on which the
applicable State law ceases to provide (or is no longer construed to provide) the
treatment described in paragraph (2).
I.R.C. § 104(d) Cross References
I.R.C. § 104(d)(1) —
For exclusion from employee's gross income of employer contributions to accident
and health plans, see section 106.
I.R.C. § 104(d)(2) —
For exclusion of part of disability retirement pay from the application of subsection
(a)(4) of this section, see section 1403 of
title 10, United States Code (relating to career compensation laws).
(Aug. 16, 1954, ch. 736, 68A Stat. 30; Sept. 8, 1960,
Pub. L. 86-723, Sec. 51, 74 Stat. 847; Oct. 10, 1962, Pub. L. 87-792, Sec. 7(d), 76 Stat. 829; Oct. 4, 1976, Pub. L. 94-455, title V, Sec. 505(b),
(e)(1), title XIX, Sec. 1901(a)(18), 90 Stat. 1567, 1568, 1766; Oct. 17, 1980, Pub. L. 96-465, title II, Sec. 2206(e)(1), 94 Stat. 2162; Jan. 14, 1983, Pub. L. 97-473, title I, Sec. 101(a), 96 Stat. 2605; Dec. 19, 1989, Pub. L. 101-239, title VII, Sec. 7641(a), 103 Stat. 2379; Aug. 20, 1996, Pub. L. 104-188, title I, Sec. 1605(a), (b), and (c), 110 Stat. 1755; Aug. 21, 1996, Pub. L. 104-191, title III, Sec. 311(b), 110 Stat. 1936; Pub. L. 105-34, title XV, Sec. 1529, Aug. 5, 1997, 111 Stat. 788; Pub. L. 107-134, title I, Sec. 113(a), Jan. 23, 2002, 115 Stat. 2427; Pub. L. 114-14, Sec. 2, May 22, 2015; Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(2)(A), March 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018--Subsec. 104(b)(2)(D). Pub. L. 115-141, Div. U, Sec. 401(a)(2)(A) substituted ‘‘Department of Veterans Affairs’’ for ‘‘Veterans’
Administration”.
2015 - Subsec. (a)(4)-(6). Pub. L. 114-14, Sec. 2, amended subsec. (a) by striking “and” at the end of par. (4), by substituting
“; and” for the period at the end of par.
(5), and by adding par. (6).
2002 - Subsec. (a)(5). Pub. L. 107-134, Sec. 113(a), substituted “a terroristic or military action (as defined in section 692(c)(2))”
for “a violent attack which the Secretary of State determines to be a terrorist
attack and which occurred while such individual was an employee of the United States
engaged in the performance of his official duties outside the United States.”
1996 - Subsec. (a). Pub. L. 104-188, Sec. 1605(b), struck the last sentence, “Paragraph (2) shall not apply to any punitive damages
in connection with a case not involving physical injury or physical sickness.”
and inserted a new sentence.
1996 - Subsec. (a)(2). Pub. L. 104-188, Sec. 1605(a), amended this paragraph generally. Prior to amendment, Par. (a)(2)
read as follows: “(2) the amount of any damages received (whether by suit or
agreement and whether as lump sums or as periodic payments)
on account of personal injuries or sickness;”.
1996 - Subsec. (c). Pub. L. 104-188, Sec. 1605(c), redesignated subsec. (c) as subsec. (d) and inserted after subsec.
(b) a new subsec. (c).
1996 - Subsec. (a)(3). Pub. L. 104-191 inserted “(or through an arrangement having the effect of accident or health
insurance)"
after “health insurance”.
1989 - Subsec. (a). Pub. L. 101-239 inserted at end
‘Paragraph (2) shall not apply to any punitive damages in connection with a
case not involving physical injury or physical sickness.’
1983 - Subsec. (a)(2). Pub. L. 97-473 substituted ‘whether by suit or agreement and whether as lump sums or as periodic
payments’
for ‘whether by suit or agreement’.
1980 - Subsec. (a)(4). Pub. L. 96-465 substituted reference to section 808 of the Foreign Service Act of 1980 for reference
to section 831 of the Foreign Service Act of 1946.
1976 - Subsec. (a)(4). Pub. L. 94-455, Sec. 1901(a)(18)(A), struck out ‘; 60 Stat. 1021‘
after ‘(22 U.S.C. 1081‘.
Subsec. (a)(5). Pub. L. 94-455, Sec. 505(e)(1), added par. (5).
Subsecs. (b), (c). Pub. L. 94-455, Sec. 505(b), added subsec. (b), redesignated former subsec. (b) as (c) and, as so redesignated,
Sec. 1901(a)(18)(B), substituted ‘1403 of title 10, United States Code (relating
to career compensation laws)’ for ‘402(h)
of the Career Compensation Act of 1949 (37 U.S.C. 272(h))'.
1962 - Subsec. (a). Pub. L. 87-792 inserted sentence requiring contributions made on behalf of an individual who is,
or has been, an employee within the meaning of section 401(c)(1), while he was such
an employee to a trust which is exempt from tax, or under a plan described in section
403(a), to be treated as contributions by the employer which were not includible in
the gross income of the employee.
1960 - Subsec. (a)(4). Pub. L. 86-723 provided for exclusion from gross income of amounts received as a disability annuity
payable under the provisions of section 831 of the Foreign Service Act of 1946, as
amended.
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub. L. 115-141, Div. U, Sec. 401(a)(2)(A), effective March 23, 2018.
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendments by Pub. L. 114-14, Sec. 2, effective on the date of the enactment of this Act [Enacted: May 22, 2015].
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Pub. L. 107-134, Sec. 113(a),
effective for taxable years ending on or after September 11, 2001.
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1605(d) of Pub. L. 104-188 provided that:
‘(1) In general.--Except as provided in paragraph
(2), the amendments made by this section shall apply to amounts received after the
date of the enactment of this Act [Aug. 20, 1996], in taxable years ending after such
date.
‘(2) Exception.--The amendments made by this section shall not apply to any
amount received under a written binding agreement, court decree, or mediation award
in effect on (or issued on or before)
September 13, 1995.’
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-191 effective for taxable years beginning after Dec. 31, 1996.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7641(b) of Pub. L. 101-239 provided that:
‘(1) In general. - Except as provided in paragraph
(2), the amendment made by subsection (a) (amending this section)
shall apply to amounts received after July 10, 1989, in taxable years ending after
such date.
‘(2) Exception. - The amendment made by subsection
(a) shall not apply to any amount received -
‘(A) under any written binding agreement, court decree, or mediation award in
effect on (or issued on or before) July 10, 1989, or
‘(B) pursuant to any suit filed on or before July 10, 1989.’
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-465 effective Feb. 15, 1981, except as otherwise provided, see section 2403 of Pub. L. 96-465, set out as an Effective Date note under section 3901 of Title 22, Foreign Relations
and Intercourse.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 505(b) of Pub. L. 94-455 applicable to taxable years beginning after Dec. 31, 1975, see section 508 of Pub. L. 94-455, set out as a note under section 3 of this title.
Section 505(e)(2) of Pub. L. 94-455 provided that: ‘The amendments made by this subsection (amending this section)
shall apply to taxable years beginning after December 31, 1976.’
Amendment by section 1901(a)(18)(A) of Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section
1901(d)
of Pub. L. 94-455, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-792 applicable to taxable years beginning after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a note under section 22 of this title.
EFFECTIVE DATE OF 1960 AMENDMENT
Section 56(e) of Pub. L. 86-723 provided that: ‘The amendment made by section 51 of this Act (amending this
section) shall be effective with respect to taxable years ending after the date of
enactment of this Act (Sept. 8, 1960).’
CHANGE OF NAME
Reference to Veterans' Administration deemed to refer to Department of Veterans Affairs
pursuant to section 10 of Pub. L. 100-527, set out as a Department of Veterans Affairs Act note under section 201 of Title
38, Veterans'
Benefits.
Coast and Geodetic Survey consolidated with National Weather Bureau in 1965 to form
Environmental Science Services Administration by Reorg. Plan No. 2 of 1965, eff. July
13, 1965, 30 FR 8819, 79 Stat. 1318. Environmental Science Services Administration abolished in 1970 and its personnel,
property, records, etc., transferred to National Oceanic and Atmospheric Administration
by Reorg. Plan No. 4 of 1970, eff. Oct. 3, 1970, 35 FR 15627, 84 Stat. 2090. By order of Acting Associate Administrator of National Oceanic and Atmospheric Administration,
35 FR 19249, Dec. 19, 1970, Coast and Geodetic Survey redesignated National Ocean Survey. See
notes under section 311 of Title 15, Commerce and Trade.
TREATMENT OF CERTAIN DISABILITY BENEFITS RECEIVED BY FORMER POLICE OFFICERS OR FIREFIGHTERS.
Sec. 1529 of Pub. L. 105-34, as amended by Pub. L. 105-206, provided the following rule:
(a) General Rule.--Amounts to which this section applies which are received by an
individual (or the survivors of the individual) as a result of hypertension or heart
disease of the individual shall be excludable from gross income under section 104(a)(1) of the Internal Revenue Code of 1986.
(b) Amounts To Which Section Applies.--This section shall apply to any amount--
(1) which is payable--
(A) to an individual (or to the survivors of an individual) who was a full-time employee
of any police department or fire department which is organized and operated by a
State, by any political subdivision thereof, or by any agency or instrumentality
of a State or political subdivision thereof, and
(B) under
(i) a State law (as amended on May 19, 1992) which irrebuttably presumed that heart
disease and hypertension are work-related illnesses but only for employees hired
before July 1, 1992, or
(ii) any other statute, ordinance, labor agreement, or similar provision as a disability
pension payment or in the nature of a disability pension payment attributable to employment
as a police officer or fireman, but only if the individual is referred to in the State
law described in clause (i); and
(2) which was received in calendar year 1989, 1990, or 1991.
(c) Waiver of Statute of Limitations.--If, on the date of the enactment of this Act
(or at any time within the 1-year period beginning on such date of enactment), credit
or refund of any overpayment of tax resulting from the provisions of this section
is barred by any law or rule of law (including res judicata), then credit or refund
of such overpayment shall, nevertheless, be allowed or made if claim therefore is
filed before the date 1 year after such date of enactment.
TRANSFER OF FUNCTIONS
Secretary of Health, Education, and Welfare redesignated Secretary of Health and Human
Services by section 3508 of Title 20, Education.
Functions of Public Health Service, Surgeon General of Public Health Service, and
all other officers and employees of Public Health Service, and functions of all agencies
of or in Public Health Service transferred to Secretary of Health, Education, and
Welfare by 1966 Reorg. Plan No. 3, 31 F.R. 8855, 80 Stat. 1610, effective June 25, 1966, set out in the Appendix to Title 5, Government Organization
and Employees.
