What is the adoption tax credit?
Since 1997, the adoption tax credit has enjoyed broad, bipartisan Congressional support. Hundreds of thousands of families have relied on this credit, which allows qualifying families to receive a tax credit as they seek to build their family through adoption.
The adoption tax credit has helped thousands of American families offset the high cost of adoption. The credit applies to all types of adoption (except stepparent adoption), including international, domestic private, and public foster care. Since 2003, families who adopted U.S. children with special needs could claim the maximum credit regardless of their qualified adoption expenses. The credit has made adoption a more viable option for many parents who might not otherwise have been able to afford adoption, allowing them to provide children with loving, permanent families. It has also enabled families to support children with disabilities and other challenges. The adoption tax credit was a refundable credit in 2010 and 2011, but not in other years. In those two years, many more families were able to benefit from the adoption credit than in the years when the credit wasn’t refundable.
How does it work?
The adoption tax credit is available to families who adopt through foster care, private domestic adoption, and intercountry adoption. When filing their tax return, an adoptive family can apply this credit toward their federal tax liability, which can reduce what the family owes in federal income tax.
For adoptions finalized in 2023 (tax returns claimed in 2024), the maximum amount a family can receive as credit is $15,950 per adopted child. For adoptions finalized in 2022 (tax returns claimed in 2023), the maximum amount a family can receive as credit is $14,890 per adopted child.
Families who adopt a child from foster care whom the state has determined has special needs may claim the maximum credit even if they have no qualified expenses. The amount of credit a family can actually receive depends on their income and federal income tax liability. Many adoptive families can never use the credit because their incomes aren’t high enough.
Why is the adoption tax credit important?
The adoption tax credit was intended to ease the significant financial burden undertaken by American families who adopt a child, no matter what type of adoption they pursue.
Plain and simple, adoption can be very expensive, as can caring for a child with special needs. For many Americans, this credit can make a pivotal difference on their journey to provide a child in need with a family. Adoption creates better outcomes for children and significant government cost savings. Research has shown that financial support can encourage adoption.
How can I help make the adoption tax credit refundable?
We’re glad you asked! Visit our Advocacy page and find out how your voice can make a difference.