- Since its introduction in 1997, the adoption tax credit has historically been a non-partisan issue widely supported by Congress, and available in some form every year.
- The adoption tax credit is available for eligible families that adopt through foster care, intercountry adoption, and private domestic adoption.
- Over time, the rules of the credit have changed. The requirements for determining families’ eligibility have changed, those adopting children with special needs became eligible to claim the credit without expenses, and the amount of the credit has increased. Before 2010, the credit could be carried forward over multiple years, and in 2010 and 2011 the credit was made refundable, allowing families to receive the full benefit during a single tax year regardless of taxes due that year.
- Although many bills have been introduced to make the adoption tax credit permanent, they have never passed. Instead, it has always been extended or amended as a part of other pieces of legislation, including the Small Business Job Protection Act of 1996, the Economic Growth and Tax Relief Reconciliation Act in 2001, the Health Care and Education Reconciliation Act in 2010, and the Tax Relief Act at the end of 2010.
- In 2012, the credit amount decreased to $12,650. It is no longer refundable, eliminating the availability of the credit to some lower- or moderate-income families without tax liability. The 2012 credit may be carried forward for five additional years, applying to each year’s liability until the full credit amount is used or time expires.
- The current adoption tax credit will sunset December 31, 2012. If Congress does not take action, the credit will revert back to $6,000 and apply only to the limited number of special needs adoptions that have adoption expenses. No credit will remain for most adoptions.
