How would delta airlines offer something tax free? It’s income, you’ll pay tax on it !
I suppose they could pay "$30K after taxes", but that would be prohibitively involved, from an accounting standpoint.
Conceptually, it's odd to me that payouts due to damages are taxed. Of course, it's hardly the strangest thing that gets taxed, so it's hardly a surprise.
Compensation from vehicle accident payments are not taxed as income in Canada.
US citizens that were on the flight will have to declare it as income.