Texas Net After-Tax Lost Wages & Loss of Earning Capacity Statute (CPRC § 18.091)
Summary of the Texas Rule (Tex. Civ. Prac. & Rem. Code § 18.091)
Requires all evidence of lost wages, loss of earning capacity, or loss of pecuniary contributions in Texas personal injury and wrongful death suits to be presented net of federal income taxes.
Statutory Text Summary & Legal Mechanics
Under Section 18.091(a), if any claimant seeks recovery for loss of earnings, loss of earning capacity, loss of contributions of a pecuniary value, or loss of inheritance, evidence to prove the loss MUST be presented in the form of a net loss after reduction for income tax payments or unpaid tax liability pursuant to any federal income tax law. Under § 18.091(b), the court must also instruct the jury whether the recovery is subject to federal or state income taxes.
Practical Impact on Texas Personal Injury Claims & Jury Trials
In Big Bird Tree Services v. Gallegos, 365 S.W.3d 173 (Tex. App.—Dallas 2012, pet. denied), Texas courts explained that presenting only gross W-2 or pre-tax hourly wage figures without evidence of effective federal income and FICA tax deductions risks a legal-insufficiency challenge to a jury's lost-wage award.
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