Do you have to pay taxes for court settlement?

It is very likely that you do. A settlement retains the same income type as the underlying claim that produced the settlement. For instance, if you sue for lost wages, then it is treated as wages. It depends on the wording of the complaint and the terms of the settlement. It would be good to have a tax attorney or CPA make this determination just to be sure. A settlement is generally only not taxable if it is compensation for physical injury. If it is not, it is generally just a question of how it is taxable. Christopher Larson Insight Law

It depends. A personal injury settlement (lump sum, not broken down between pain and suffering vs. lost income or other measurable economic loss) is completely tax-free. That is because it is not deemed income since it is in reimbursement for a loss you suffered. If the case were to go to trial, it is more common to get a detailed verdict form, which assigns specific dollar amounts to pain and suffering, permanent impairment, and other "non-economic" losses, which are tax-free, and other "economic" losses such as lost wages, which would have been taxable had you earned them--and therefore, are taxable when they are awarded in a judgment. A settlement, however, is usually in lump sum, and all of it is deemed to be non-taxable losses by default. In other cases, if what you recover in damages is in reimbursement for a monetary loss you actually suffered and paid, then it is tax-free, unless you already took a tax deduction for that loss on your income taxes. If the recovery is for lost profits on a job or contract, then you would owe taxes on the part of the damages for the lost profits, because you would have owed taxes on those profits had you earned them. If in doubt, consult a CPA.