Why Must Lost Wages & Earning Capacity Be Calculated 'After Federal Taxes' in Texas? (CPRC § 18.091)
Direct Answer Under Texas Law
Under Texas Civil Practice and Remedies Code § 18.091(a), if any claimant seeks recovery for loss of earnings, loss of earning capacity, or loss of contributions of a pecuniary value, the evidence to prove the loss MUST be presented in the form of a net loss after reduction for federal income tax liabilities (or unpaid tax credits).
Critical Texas Procedural Trap to Watch Out For
If a high-earning worker testifies only to their gross pre-tax salary without introducing their W-2s, Form 1040 effective federal tax rate, or a forensic economist's net-of-tax computation, defense counsel will move for a directed verdict on lost earning capacity for failing to satisfy CPRC § 18.091(a)!
Recommended Action Plan for Texas Claimants
Provide your last 3 years of federal Form 1040 tax returns and W-2/1099 statements so your net effective federal tax rate is subtracted cleanly in compliance with § 18.091.
Detailed Texas Statutory & Case Law Breakdown
Under Tex. Civ. Prac. & Rem. Code § 18.091(a)–(b) and controlling Texas appellate precedent in Big Bird Tree Service v. Gallegos, 365 S.W.3d 173 (Tex. App.—Dallas 2012), Texas trial and appellate courts apply strict statutory rules to this exact issue. Unlike generic multi-state legal summaries, Texas tort procedure under the Civil Practice and Remedies Code (CPRC), Insurance Code, Transportation Code, and Labor Code enforces specific statutory formulas—including the 51% proportionate responsibility bar (CPRC § 33.001), paid-or-incurred medical expense admissibility (CPRC § 41.0105 / Haygood), and mandatory statutory lien caps (Prop. Code Ch. 55 & Ins. Code Ch. 140).
Step-by-Step Texas Procedural Checklist
- Verify the exact statutory text of Tex. Civ. Prac. & Rem. Code § 18.091(a)–(b) and how Texas courts apply Big Bird Tree Service v. Gallegos, 365 S.W.3d 173 (Tex. App.—Dallas 2012) in your county's appellate district.
- Beware of the Texas Procedural Trap: If a high-earning worker testifies only to their gross pre-tax salary without introducing their W-2s, Form 1040 effective federal tax rate, or a forensic economist's net-of-tax computation, defense counsel will move for a directed verdict on lost earning capacity for failing to satisfy CPRC § 18.091(a)!
- Execute the Texas Action Plan: Provide your last 3 years of federal Form 1040 tax returns and W-2/1099 statements so your net effective federal tax rate is subtracted cleanly in compliance with § 18.091.
- Preserve all physical, electronic, and medical billing records early so your CPRC § 18.001 affidavits and TRCP 194.2 Initial Disclosures are complete.
Frequently Asked Questions Under Texas Law
Why Must Lost Wages & Earning Capacity Be Calculated 'After Federal Taxes' in Texas? (CPRC § 18.091)
Under Texas Civil Practice and Remedies Code § 18.091(a), if any claimant seeks recovery for loss of earnings, loss of earning capacity, or loss of contributions of a pecuniary value, the evidence to prove the loss MUST be presented in the form of a net loss after reduction for federal income tax liabilities (or unpaid tax credits). Key Texas Trap to Avoid: If a high-earning worker testifies only to their gross pre-tax salary without introducing their W-2s, Form 1040 effective federal tax rate, or a forensic economist's net-of-tax computation, defense counsel will move for a directed verdict on lost earning capacity for failing to satisfy CPRC § 18.091(a)!
What Texas statute and Supreme Court / appellate precedent control after-tax lost wages rule (cprc § 18.091)?
This question is governed in Texas by Tex. Civ. Prac. & Rem. Code § 18.091(a)–(b) and the legal standards articulated in Big Bird Tree Service v. Gallegos, 365 S.W.3d 173 (Tex. App.—Dallas 2012). Recommended step: Provide your last 3 years of federal Form 1040 tax returns and W-2/1099 statements so your net effective federal tax rate is subtracted cleanly in compliance with § 18.091.
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