Calculate past lost wages and future earning loss from your injury — for both hourly employees and self-employed individuals.
Lost wages in a personal injury claim include more than just your base salary. Courts recognize: base wages or salary, bonuses and commissions you would have earned, overtime you regularly worked, lost business income if self-employed, the value of employer-paid benefits, and future earning capacity if the injury is permanent.
Document everything: pay stubs, tax returns, employer letters confirming missed work, and expert economic reports for future earnings projections.
Lost income is harder to prove without a regular paycheck, but it's still recoverable. Self-employed claimants typically rely on prior-year tax returns (usually 2-3 years) to establish an average income baseline, profit-and-loss statements from before and after the injury, and — for a longer-term or contested claim — an accountant's or economist's report projecting what the business would have earned had the injury not occurred. Insurers scrutinize self-employed wage claims more closely than W-2 claims, so thorough documentation matters even more here.
If your business kept operating without you during recovery (an employee or partner covered your work), you may still have a claim for the cost of that coverage, or for reduced business value if your personal involvement was central to client relationships or specialized skills.
The example below is a hypothetical illustration of the math only — not a typical outcome.
An hourly employee earning $28/hour at 40 hours/week misses 12 weeks of work while recovering. Weekly income = $28 × 40 = $1,120. Past lost wages = $1,120 × 12 = $13,440. If the injury also causes a 25% reduction in future earning capacity for an estimated 10 remaining working years, and the claimant's annual income is $1,120 × 52 = $58,240: future lost earnings = $58,240 × 25% × 10 = $145,600. Add $6,000/year in lost benefits over the same 10 years ($60,000), and the total lost-compensation estimate is $13,440 + $145,600 + $60,000 = $219,040 — illustrating how, for a claim involving any lasting earning-capacity reduction, the future-loss component often dwarfs the past lost wages, which is also why the future-loss figure typically draws the most scrutiny from an insurer or opposing expert.
For a short-term wage loss, usually not — pay stubs and an employer letter are often enough. For a permanent or long-term impairment affecting future earning capacity, insurers and courts typically expect expert economic testimony projecting lifetime earnings loss, since that figure involves assumptions about career trajectory, inflation, and work-life expectancy that go beyond simple documentation.
Generally, compensation tied to physical injury (including the medical and pain & suffering portions) is not taxable, but the lost-wages component of a settlement is sometimes treated differently since it replaces income that would have been taxed had you earned it normally. Rules vary by case structure — consult a tax professional about your specific settlement.
You may still have a claim. Many states allow recovery for the value of PTO or sick leave used during recovery, on the reasoning that the injury cost you those benefits even though your paycheck looked normal. Keep records of exactly how much leave you used and when.
Lost wages refers to income you actually missed during recovery — a calculation grounded in your pay history and the time you were out. Loss of earning capacity is forward-looking and broader: it asks whether the injury permanently reduces what you're capable of earning over your remaining working life, even if you eventually return to some form of work. A warehouse worker who can no longer lift heavy loads and must take a lower-paying desk job, for example, may have a valid earning-capacity claim even after going back to work full time. This distinction is a major reason permanent-injury cases typically require expert economic analysis rather than a simple wage calculation.
Lost wages are one input into a full claim value. See how they combine with medical costs and pain & suffering in the Settlement Value Estimator, or check what portion of your final settlement you'd actually take home after contingency fees and case costs.