Tax Exemptions

United States

Restitution payments paid to a Nazi victim, his or her heirs or estate, are not subject to federal income tax. 
See IRS Publication 525 at page 34.

This exclusion  includes payments made by a foreign  government, the United States, or any foreign or domestic entity.  Certain types of  interest earned on these payments is also excluded from income tax, but this exclusion is limited to interest earned by funds held in escrow pursuant to litigation or in settlement funds established by courts.   This exclusion does not apply to interest earned on individual investments made by a Nazi victim, his or her heir or estate with restitution payments.   

Only four U.S. states currently tax compensation and restitution payments:  Alabama, Arkansas, Mississippi, and Pennsylvania.

United Kingdom

Lump sum compensation payments received by Holocaust survivors will be excluded from inheritance tax (IHT) under an extended concession announced in March 2002 by the British government. Extra-statutory concession (F20) allows the amount of the compensation payment to be deducted from the claimant’s IHT chargeable estate, whether the payment is made to the claimant before their death or is made subsequently to their personal representatives. The concession, does not, however, extend to payments received or expected from property restitution or compensation in respect of lost, stolen or confiscated assets.

In March 2006, the government of the United Kingdom agreed to make exempt from income and capital gains taxes compensation awards paid for accounts in foreign banks owned by Holocaust victims. Legislation was enacted to extend the terms of tax exemptions on Holocaust-related compensation originally enacted in 2000. The proposed legislation would allow recipients of awards for, amongst other programs, dormant Swiss bank accounts from the Claims Resolution Tribunal (CRT), to be free from income and capital gains taxes. The exemption was enacted after talks between the Association of Jewish Refugees and the British government. Recipients of qualifying awards where tax has already been paid will be entitled to a rebate. Claimants expecting a payment do not need to include the award in future tax returns. The Finance Bill will also make provision for an exemption from retrospective inheritance tax where the estate or heirs receive an award in respect of someone who died before the schemes were introduced.

Additionally, following a November 2001 government decision, compensation payments to Holocaust survivors will be disregarded as capital when calculating housing and income related benefits following an extension to Social Security regulations. For more information, see

Other countries where compensation payments are exempted partially or in full from taxation:


The Claims Conference continues to work on obtaining tax exemptions for payments to survivors in other countries.

CAUTION:  Federal and state tax laws are complex and a professional tax advisor should be consulted. The information presented herein is intended for information purposes only and solely as a general guide. The information is not intended as legal advice. It is a summary of specific issues and does not represent a definitive or complete statement of the programs and policies of the agencies or governments mentioned. The information may not address the special needs, interests and circumstances of individual recipients. Individual situations differ and recipients are urged to seek individual  professional advice. Individuals seeking specific information on a program are urged to contact the relevant program or to consult their social service agency or help center representative. To the best of our knowledge the information is correct as of the date of this document and this information may change subsequent to the said date – January 2010.