Adoption Tax Credit for 2025-2026
The Adoption Tax Credit helps you shrink your tax bill when you expand your family through an adoption. For the 2024 tax year, you can claim the credit for up to $16,810 of qualified adoption expenses per child. However, the credit can be reduced if your 2024 modified adjusted gross income is greater than $252,150. Use Form 8839 to calculate the credit.
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Key Takeaways
- The Adoption Tax Credit helps ease the financial burden of adoption by allowing would-be parents to claim qualified adoption-related expenses as a tax credit on their federal income tax return.
- For the 2025 tax year, the credit is capped at $17,280 per eligible child. The credit starts to phase out for taxpayers with a modified adjusted gross income (MAGI) above $259,190 and is eliminated for those with a MAGI over $299,190.
- For 2025, up to $5,000 of the Adoption Tax Credit is a refundable credit, meaning that even if it reduces your tax bill to $0, you could still get up to $5,000 refunded. Any remaining unused credit can be carried over for up to five years.
- For 2024, the Adoption Tax Credit is a nonrefundable credit, meaning it can reduce your tax liability to zero but won't result in a tax refund. However, any unused credit can be carried forward for up to five years.
- Form 8839 is used to calculate the credit amount.
Adoption can be costly
The adoption process can be expensive. According to a recent U.S. government report, the cost of adopting a child can run as high as $60,000. That’s a steep price to pay for most families.
Fortunately, Uncle Sam provides some help with the Adoption Tax Credit. This tax break allows parents to offset some of their adoption costs when they file their federal income tax return. The credit has various requirements and limitations, but most parents can save some money on adoption costs through the credit.
So, if you’re planning to adopt a child – or you’re in the middle of the process – you certainly want to be familiar with the Adoption Credit. To help you get up-to-speed, let’s take a closer look at this valuable tax benefit. We’ll start with an overview of the credit, and then answer frequently asked questions about qualifying for the credit, claiming the credit, how much you can save, and more.
What is the Adoption Tax Credit?
The Adoption Tax Credit is a federal tax credit that helps make the adoption process more affordable for families. If you satisfy the eligibility requirements, you can claim the credit for qualified adoption-related expenses.
The credit applies on a per child basis. So, for example, if you’re adopting more than one child, you can claim the credit for expenses related to the adoption of each one. You can also claim the credit for both domestic and international adoptions. However, there are different rules for when you can claim the credit for U.S. and foreign adoptions.
The credit is capped at a maximum amount (the maximum is adjusted annually to account for inflation). The limit applies on a per-child basis, not on a per-year basis. As a result, if you have expenses for the adoption of a single child over the course of several years, you must subtract any Adoption Credits claimed in previous years from the maximum when determining the current year credit.
If your adoption expenses are greater than the maximum (as adjusted for any previously claimed credits), you won’t be able to claim the credit for all your costs. The credit is also gradually reduced – potentially to $0 – if your income is above a certain amount (the income thresholds are also adjusted each year for inflation).
For 2025 and beyond, up to $5,000 of the Adoption Tax Credit is a refundable credit, which means it can reduce your tax bill to zero, and up to $5,000 of any amount beyond your tax liability can be refunded to you. If any of the credit remains after the refund, that amount can be carried forward for up to five years.
For 2024 and earlier years, the Adoption Tax Credit is a nonrefundable credit, which means it can reduce your tax bill to zero, but any amount beyond your tax liability is not refunded to you. But any unused credit can be carried forward to up to five subsequent tax years. For example, if you qualify for a $2,500 credit but only owe $1,000 of tax, the $1,500 credit balance ($2,500 - $1,000 = $1,500) can be claimed against taxes you owe in the next five tax years until it’s used up.
Who can claim the Adoption Tax Credit?
Most people who adopt (or attempt to adopt) a child can claim the federal Adoption Tax Credit for related expenses. This includes adoptions of foster children, international adoptions, adoptions through an agency, and even unsuccessful adoptions of a U.S. child. If you adopt multiple children, you can also claim the credit for any qualified adoption expenses paid for each child.
However, there are a few eligibility requirements that can prevent a claim if they’re not satisfied. For example, the credit is only available for expenses related to the adoption of either a:
- child under age 18
- person of any age who is physically or mentally unable to take care of themself
You also can’t claim the credit if you adopt your spouse’s child (that is, your stepchild).
In addition, you generally have to file a joint tax return to claim the Adoption Credit if you’re married. But there are two exceptions to this rule for married people filing a separate return. First, you can still qualify for the credit if you’re legally separated. Second, you can claim the credit if all the following are true:
- You didn’t live with your spouse during the last six months of the tax year.
- The adopted child lived in your home more than half of the tax year.
- You provided over half the cost of keeping up your home during the tax year.
Plus, a married person who’s filing separately can claim an Adoption Credit carried forward from a previous year. However, if they were married in the tax year in which the adoption expenses first became available for the credit, they can only claim the carryforward credit if they filed a joint return for that year.
What expenses qualify for the Adoption Tax Credit?
The Adoption Tax Credit is only available for “qualified adoption expenses.” Basically, this includes any reasonable and necessary out-of-pocket expenses directly related to the legal adoption of an eligible child. For example, you can claim the credit for:
- adoption fees
- attorney fees
- court costs
- travel expenses while away from home (including meals and lodging)
As long as they meet the basic requirements, you can even count costs you pay before identifying the child you want to adopt. For instance, you can generally claim the cost of a home study conducted at the beginning of the adoption process.
However, you can’t claim the Adoption Credit for expenses that were reimbursed by your employer, a government program, or other source. Costs associated with a surrogate parenting arrangement don’t qualify, either.
You also can’t “double dip” and claim the Adoption Credit for any expenses that are also used to claim another federal tax deduction or credit.
How much is the Adoption Tax Credit?
For the 2025 tax year, you can only claim the Adoption Tax Credit for up to $17,280 of qualified expenses per child ($16,810 for 2024). However, it’s important to emphasize that this cap applies to all costs for the adoption of a single child, regardless of when you paid them. So, for example, if you claimed a $10,000 Adoption Credit on your 2024 tax return, your 2025 credit for expenses related to the adoption of the same child is capped at $7,280 ($17,280 - $10,000 = $7,280).
The credit is also phased-out if your modified adjusted gross income (MAGI) is above a certain amount. For the 2025 tax year, your credit is gradually reduced if your MAGI is more than $259,190 ($252,150 for 2024). It’s completely eliminated if your MAGI is greater than $299,190 ($292,150 for 2024).
For purposes of the Adoption Credit, your MAGI is equal to your adjusted gross income reported on your 1040 form, plus any:
- foreign earned income exclusion
- foreign housing exclusion or deduction
- exclusion of income for residents of American Samoa or Puerto Rico
Special needs adoptions
If you adopt a child with special needs, you might be able to claim the full Adoption Tax Credit ($17,280 for 2024) for the year the adoption is finalized even if you didn’t pay any adoption expenses. The credit amount can still be reduced if you previously claimed the credit for expenses related to the adoption of the same child, or if your MAGI is above the phase-out threshold.
A child has special needs for purposes of the credit if all of the following are true:
- the child was a U.S. citizen or resident when you began the adoption process
- a state (including the District of Columbia) has determined that the child can't or shouldn't be returned to their parents' home
- the state has determined that the child won't be adopted unless assistance is provided to the adoptive parents
When can you claim the Adoption Tax Credit?
There are special rules that determine when you can claim the Adoption Tax Credit. The most important factor is whether it's a domestic or a foreign adoption. But the year you pay adoption expenses and when (if ever) the adoption is finalized also make a difference.
Domestic adoptions
Let’s start with domestic adoptions, which is where the child you’re adopting is a U.S. citizen or resident.
In this case, if you pay qualified adoption expenses in any year before the year the adoption becomes final, you can claim the credit for those expenses on your tax return for the year after the year of payment.
Expenses paid in the year the adoption is finalized or later can be claimed for the tax year payment is made.
Example for domestic adoptions: Suppose you paid qualified expenses of $3,000 in 2022, $4,000 in 2023, and $5,000 in 2024 for the adoption of a child who is a U.S. citizen. The adoption was finalized in 2024. In 2025, you pay an additional $500 of qualified expenses that are related to the same adoption.
In this case, you can claim the $3,000 of expenses paid in 2022 on your 2023 tax return (year after the year of payment). The $4,000 paid in 2023 can be claimed on your 2024 tax return (again, year after the year of payment). Since the adoption was finalized in 2024, you can also claim the $5,000 paid that year on your 2024 return (year of payment). Finally, the $500 paid in 2025 can be claimed on your 2025 tax return (year of payment).
Foreign adoptions
The timing rules are a bit different if you’re adopting a child who isn't a U.S. citizen or resident when the adoption process begins. The critical difference is that you can only claim the Adoption Tax Credit if the adoption is finalized. If the adoption is unsuccessful for any reason, you can’t claim the credit.
As a result, you can’t claim the credit for any qualified adoption expenses until the tax year the adoption becomes final. If you paid qualified expenses in any previous year, you have to wait to claim the credit for them.
The timing rules for foreign and domestic adoptions are the same for expenses paid in the year the adoption is finalized and later. That is, those expenses can be claimed for the year they’re paid.
Example for foreign adoptions: Assume you paid qualified expenses of $3,000 in 2022, $4,000 in 2023, and $5,000 in 2024 for the adoption of a child from another country. The adoption was finalized in 2024. You then pay an additional $500 of qualified expenses for the same adoption in 2025.
For this adoption, you can claim the first $7,000 of expenses paid in 2022 and 2023 ($3,000 + $4,000 = $7,000) on your 2024 tax return (year the adoption is finalized). The $5,000 of expenses paid in 2024 can also be claimed on your 2024 return (year of payment). The $500 paid in 2025 can be claimed on your 2025 tax return (year of payment).
How can you claim the Adoption Tax Credit?
Use Form 8839 to calculate the Adoption Tax Credit. The credit amount is then reported on Schedule 3 (Form 1040).
Form 8839 must be sent to the IRS along with the rest of your federal income tax return (Form 1040).
TurboTax Tip:
You’ll be asked to provide an identification number for the child you adopted (or are adopting) on Form 8839. Enter the child’s Social Security number (SSN) if possible. If you can’t get a SSN in time to file your return, you can use an Adoption Taxpayer Identification Number for a U.S. child (apply using Form W-7A) or an Individual Taxpayer Identification Number for a foreign child (apply using Form W-7).
What if my employer paid some of my adoption expenses?
Some employers pay some or all of their employees’ adoption costs. If your company offers this benefit, you may be able to exclude up to $17,280 of the adoption expenses paid by your employer from your taxable income in 2025 (up to $16,810 for 2024). This exclusion is also calculated on Form 8839.
However, since you’re already receiving a tax benefit from your employer’s adoption assistance, you can’t also claim the Adoption Tax Credit for any expenses paid by your employer. As a result, don’t include adoption expenses reimbursed by your employer when calculating the credit.
Can you also “write-off” adoption costs on your taxes?
Adopting parents often ask if they can “write off” (that is, deduct) their adoption expenses on their federal income tax return. Those parents are typically disappointed when they hear that there’s no tax deduction for adoption costs. But they perk up when they learn that the Adoption Tax Credit is even better.
Tax credits are generally better than tax deductions. Both will lower your tax bill, but a tax credit will typically save you more. That’s because deductions only lower your taxable income, which only reduces the tax you owe by a fraction of the deduction amount. For instance, if you’re in the 22% tax bracket and claim a $1,000 tax deduction, your tax liability is only reduced by $220 ($1,000 x .22 = $220).
On the other hand, you can generally subtract income tax credits from the tax you owe on a dollar-for-dollar basis. So, if you have a $1,000 Adoption Tax Credit, you can reduce your tax bill by up to $1,000 (although if your pre-credit tax bill is more than $1,000, the Adoption Credit will only reduce your tax liability to $0 since it’s a nonrefundable credit).
Is the Adoption Tax Credit related to the Child Tax Credit?
The Child Tax Credit is claimed by millions of families each year. For 2025, that credit is worth up to $2,200 per child under age 17.
The good news is that adopting parents can claim the Child Tax Credit once the adoption is finalized if they satisfy all the credit’s requirements. But the Child Tax Credit and the Adoption Tax Credit aren’t related in any other way. As a result, there’s nothing preventing you from claiming both credits (if you qualify) on the same tax return.
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