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In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer.As a portion of his benefits is excluded due to the 'on job injury' causing his disability - we need to know a specific reason of such exclusion.
I guess that a part of your disability pension is paid under a statute that provides benefits only to employees with service-connected disabilities which is classified as workers' compensation.That part is exempt from tax. The rest of your pension, based on years of service, is taxable as pension or annuity income. If you die, the part of your survivors' benefit that is a continuation of the workers' compensation is exempt from tax.
Generally the age affects workers' compensation...
If the employee at the date of the injury was younger than retirement age (currently 65 years of age), then the employee if covered up to the day the injured employee reaches retiring age and some payments may last up to 12 months after weekly payments cease.
After the disability pension is no longer qualifies for workers' compensation - the full amount is taxable.