Are Motorcycle Accident Settlements Taxable in Pennsylvania?

Motorcycle accident settlements are generally not taxable in Pennsylvania. However, some exceptions may exist, such as paying federal taxes on punitive damages.

If you or someone you love suffered injuries in a motorcycle collision caused by negligence, you may qualify for personal injury compensation. A Pittsburgh motorcycle accident lawyer can help you seek damages and explain any possible resulting tax implications. 

What Damages Can You Recover in a Motorcycle Accident Settlement?

The first step in understanding whether part of your settlement will be taxable income is learning about the types of financial compensation you can recover. If a negligent driver or other liable party caused your motorcycle accident, a Pittsburgh personal injury lawyer can help you seek the following types of damages:

Economic Damages

Economic damages compensate victims for tangible, out-of-pocket losses. In a motorcycle accident settlement, economic damages may include:

• Current and future medical expenses
• Lost wages and employment benefits
• Lost future earning capacity
• Motorcycle repair or replacement costs
• Household services

If your loved one sustained a fatal injury, a Pittsburgh wrongful death lawyer can seek compensation for their medical bills, lost income, lost future financial support, and funeral and burial expenses. 

Non-Economic Damages

Non-economic damages compensate victims for intangible losses caused by the physical, mental, and emotional effects of their injuries. Non-economic damages in a personal injury settlement may include monetary awards for:

• Physical pain and suffering
• Scarring
• Disfigurement
• Mental anguish
• Emotional trauma
• Reduced quality of life
• Wrongful death damages for the loss of a family member’s companionship, society, comfort, and guidance

Together, economic and non-economic damages are often referred to as “compensatory damages.” 

Punitive Damages

Punitive damages are not typically included in insurance settlements and are rarely awarded by the courts in a personal injury lawsuit. These damages do not compensate for a victim’s losses. They punish defendants for intentional wrongdoing or gross misconduct and deter future bad behavior. 

Is Your Motorcycle Settlement Considered Taxable Income?

According to the Pennsylvania Department of Revenue, damages, awards, and settlements from personal injury are not subject to state income taxes. Therefore, motorcycle accident settlements in Pennsylvania are generally not taxable. This tax exemption covers all forms of compensatory damages. 

The Internal Revenue Service states that the U.S. also does not tax compensatory damages awarded for personal injury. However, the federal government does tax punitive damages. 

Who Pays for Your Motorcycle Accident Damages?

Pennsylvania’s “choice” no-fault auto insurance system excludes motorcycle riders. This means motorcyclists are not subject to the tort selection scheme of auto insurance coverage. Motorcyclists have an unrestricted right to seek compensation from an at-fault party after an accident. 

Therefore, the liable party who caused the motorcycle accident should pay for your damages. Depending on the circumstances of the case, those at fault for a motorcycle collision may include:

• A liable driver – Drivers are financially responsible if their negligent actions cause a crash. Examples of driver negligence include speeding, failing to yield the right of way, making an improper turn, or passing a motorcycle too closely. 
• A driver’s employer – If the accident involved a commercial driver, delivery driver, or someone else who was working at the time, their employer may be liable for their negligent actions. 
• A negligent mechanic or manufacturer – If the crash involved a defective vehicle, faulty car part, or negligent repairs, a mechanic or a vehicle or auto parts manufacturer may be at fault.  
• A municipality – A public roadway owner may bear liability for accidents caused by negligent road maintenance or dangerous road design. 

Vehicle Drivers Have a Responsibility to Watch for Motorcyclists

According to the Pennsylvania Department of Motor Vehicles (DMV), 3,452 motorcycle accidents occurred in the Commonwealth in 2023. These collisions resulted in 908 serious injuries and 238 fatalities. 

Because motorcycles are smaller and harder to see than passenger vehicles, motorists must be aware when sharing the road with bikers. Drivers have an obligation to:

• Afford motorcycle riders the same rights, privileges, and use of the roadway as they would a full-sized vehicle, including allowing them a full lane.
• Leave at least four seconds of traveling distance when following a motorcycle.
• Check mirrors and blind spots for motorcycles at intersections and before changing lanes.
• Use turn signals before changing lanes or merging.

How Long Do You Have to Seek a Motorcycle Accident Settlement?

You should begin seeking a motorcycle accident settlement as soon as possible. Start by filing a claim with the liable party’s auto insurance policy. 

If you choose to pursue damages via a personal injury lawsuit, you have two years to take legal action, according to Pa. C.S.A. § 5524. If the statute of limitations runs out, the court will usually refuse your suit. An expired statute will also reduce your insurance bargaining power because you will no longer have any legal leverage over the insurance company. 

Should You Hire a Motorcycle Accident Lawyer in Pennsylvania?

A personal injury attorney can fight to maximize your motorcycle accident settlement and ensure you meet your tax obligations, if applicable. A lawyer can do the following to build your personal injury claim and seek damages while you focus on your physical recovery:

• Collect case evidence
• Identify liable parties and prove they acted negligently 
• Identify and pursue fair compensation for all your economic and non-economic damages
• Draft and file your insurance claim and lawsuit
• Manage case-related paperwork, communications, deadlines, and “red tape”
• Tirelessly negotiate for a full and fair settlement
• Represent you in civil court, if necessary

Contact Berger and Green to Connect With a Motorcycle Accident Attorney

At Berger and Green, we give every client the personalized attention their case deserves. If you or your loved one sustained a motorcycle accident injury, we will guide you through the legal process and fight for the settlement you need to protect your health and future. 

Our legal team takes cases on a contingency basis, meaning we do not collect attorney fees until we obtain compensation for you. Contact us online or call for a free, no-obligation consultation and connect with a motorcycle accident lawyer in Pittsburgh, Pennsylvania.