Personal injury awards are tax free.  Other awards are taxable.  Here is a question in the middle:  Is an award for mental anquish in a federal whistleblowing case taxable?  

" A federal appeals court ruled Tuesday that awards for mental anguish are taxable, which reversed what it said just 11 months ago. The decision came in the case of Marrita Murphy, who was awarded damages for emotional distress and loss of reputation after she complained to authorities of environmental hazards at a New York Air National Guard base in Syracuse.

The taxpayer’s situation "seems akin to an involuntary conversion of assets; she was forced to surrender some part of her mental health and reputation in return for monetary damages," said the court. Ms. Murphy intends to seek further review in the courts, said one of her lawyers"