Nontaxable Income

Some types of income you receive are not taxable. When you total your gross income to determine whether you are required to file a tax return, do not include your nontaxable income. Keep records of your nontaxable income. Some types of income that generally are not taxable include:

  • Child support payments
  • Welfare benefits
  • Life insurance proceeds received because of the death of an individual
  • Interest on certain state or local government obligations
  • Accident and health insurance proceeds, including certain long term care insurance contracts
  • Certain property received as a gift or inheritance
  • Benefits received under any law administered by the Department of Veteran's Affairs
  • Amounts received under a worker's compensation act for an occupational sickness or injury
  • Qualified distributions from Coverdell Education Savings Accounts (formerly called Education IRAs)
  • Certain Roth IRA distributions
  • Certain amounts withdrawn from Medical Savings Accounts (MSAs) to pay medical expenses
  • Limited amounts of dependent care assistance paid through a dependent care assistance program
  • Death gratuity benefits paid to survivors of deceased armed forces members for deaths occurring after September 10, 2001
  • Homeowners assistance program payments, subject to certain limits, paid after November 11, 2003, by the Department of Defense
  • For tax years after 2002, Dependent Care Assistance Program payments paid by the military for military personnel

IRS Publication 525 Taxable and Nontaxable Income, contains additional information on whether specific items of income are taxed.

Social Security or Railroad Retirement Benefits. All or a portion of your Social Security or equivalent Railroad Retirement Benefits may be nontaxable. Refer to IRS Topic No. 423 Social Security and Equivalent Railroad Retirement Benefits for more information.

Scholarship and Fellowship Grants. Some scholarship and fellowship grants may be nontaxable. Refer to IRS Topic No. 421 Scholarships, Fellowship Grants, and Other Grants for more information.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.