How Are Punitive Damages Calculated in Texas?

In Texas personal injury and wrongful death cases, most damages awarded to victims are compensatory—meant to reimburse for losses such as medical bills, lost wages, and pain and suffering. But in cases involving extreme misconduct, the court may also award punitive damages (also called exemplary damages) to punish the wrongdoer and deter similar behavior in the future.

If you’ve been injured due to another’s gross negligence, fraud, or malice, you may be wondering: How are punitive damages calculated in Texas?

WHAT ARE PUNITIVE DAMAGES?

Punitive damages are not designed to make the victim whole—that’s the purpose of compensatory damages. Instead, they:

• Penalize the defendant for outrageous or intentional conduct
• Serve as a public deterrent for similar future acts

They are awarded in addition to compensatory damages, but only in limited situations where the defendant’s actions were especially egregious.

WHEN ARE PUNITIVE DAMAGES ALLOWED IN TEXAS?

Under Texas Civil Practice and Remedies Code § 41.003, punitive damages may be awarded only if the plaintiff proves by clear and convincing evidence that the harm resulted from:

• Fraud
• Malice (intent to cause substantial harm)
• Gross negligence (an extreme degree of risk, with actual awareness but conscious disregard for safety)

HOW TEXAS CALCULATES PUNITIVE DAMAGES

Texas law imposes statutory caps on punitive damages, with a few exceptions (such as certain felony criminal acts). The maximum amount is the greater of:

1. Two times the amount of economic damages (medical bills, lost wages, etc.) plus up to $750,000 in non-economic damages, OR
2. $200,000 total if there are no economic damages awarded.

Example 1:

If a jury awards:

• Economic damages: $500,000
• Non-economic damages: $300,000

Punitive damages could be capped at:
2 × $500,000 = $1,000,000

• $750,000 (non-economic damages cap)
  Total: $1,750,000

Example 2:

If there are no economic damages, the maximum punitive damages allowed would be $200,000.

FACTORS THE JURY CONSIDERS

When deciding the amount of punitive damages (within the legal cap), the jury may evaluate:

• The nature of the wrong
• The character of the defendant’s conduct
• The degree of reprehensibility
• The defendant’s financial condition (ability to pay)
• The relationship between the punitive award and the actual harm caused

EXCEPTIONS TO THE DAMAGE CAPS

Texas does not apply punitive damage caps if the harm was caused by certain intentional and serious criminal conduct, such as:

• Murder or capital murder
• Aggravated assault
• Sexual assault
• Injury to a child, elderly, or disabled individual
• Certain intoxication-related manslaughter offenses

BURDEN OF PROOF

Punitive damages require clear and convincing evidence, which is a higher standard than the preponderance of the evidence required for most civil claims. This means the evidence must produce a firm belief or conviction in the jury’s mind about the truth of the allegations.

FREQUENTLY ASKED QUESTIONS

Are punitive damages taxable?
Yes. In most cases, punitive damages are considered taxable income under IRS rules.

Can punitive damages be covered by insurance?
Often no. Many Texas insurance policies exclude coverage for punitive damages because they are meant to punish intentional or reckless conduct.

Do all personal injury cases qualify for punitive damages?
No. They are reserved for cases involving particularly egregious misconduct.

FINAL THOUGHTS

Punitive damages in Texas are carefully regulated, with caps in place to prevent excessive awards. While they can significantly increase a settlement or judgment, they are only available in cases where the defendant’s behavior was intentional, fraudulent, or grossly negligent.

If you believe your case involves conduct that could justify punitive damages, it’s important to work with an experienced attorney who understands how to present the evidence and navigate Texas’s complex damages laws.