Growing your family through adoption can be a wonderful experience, but it can be costly. However, there’s a federal tax break that might help.
The adoption tax credit is a refundable federal credit that allows adoptive parents to claim specified amounts of qualified adoption expenses to lower their federal tax liability. The credit is available for each child adopted, whether via public foster care, domestic private adoption, or international adoption.
And President Donald Trump's so-called 'big beautiful bill', signed into law on July 4, includes a provision that enhanced the adoption tax credit and made the tax break partially refundable, allowing parents to claim up to $5,000 in credits.
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The adoption tax credit is also indexed to inflation, which adds an incentive for households looking to grow their families via adoption. The IRS has recently announced the 2026 credit amount. (More on that below.)
If you think you might qualify for the credit, here’s what you need to know.
IRS Tax Breaks for Adoption
What are the 2025 adoption tax credit amounts?
As mentioned, the adoption tax credit is designed to help families offset the costs of adoption, whether domestic, private, through foster care or foreign.
As a partially refundable tax break, you may receive only a part of the credit as a tax refund, even if your tax liability is zero.
- For tax year 2025 (returns you'll file in early 2026), the maximum adoption credit amount is $17,280, per the IRS.
- Trump's 2025 tax and spending bill enhanced the refundable portion of the credit to $5,000 and indexed the credit to inflation.
- The adoption tax break is also partially refundable after December 31, 2024. (More on that below).
The amount you receive will also depend on your income threshold, which is indexed for inflation:
- For the 2025 tax year, the tax credit begins to phase out for taxpayers with a modified adjusted gross income (MAGI) above $259,190. The credit completely phases out once your MAGI reaches $299,190.
2026 Adoption Tax Credit
IRS announces 2026 adoption tax credit amount
The federal adoption tax credit for the 2026 tax year (taxes generally filed in 2027) is worth up to $17,670 (up from $17,280 for 2025).
The adoption credit may be used for qualified adoption expenses paid to adopt a child, and as an exclusion from income for employer-provided adoption assistance. However, you cannot use the same qualifying expenses for both the credit and the exclusion.
The amount you can claim will also depend on your modified adjusted gross income (MAGI).
- For the 2026 tax year, the credit phase-out begins at $265,080 and phases out completely at $305,080 or above.
- Additionally, there are a few limitations, including a special needs exception.
Who is eligible for the adoption credit?
To qualify for the maximum amount of the adoption tax credit for the 2025 tax year you’ll have to make under $259,190. The tax benefit also covers costs related to an adoption if the child meets the following criteria:
- The child is under 18. If the child turns 18 during the year of the adoption, the child is eligible for the part of the year they were under 18 years of age.
- The child is disabled or physically or mentally unable to take care of themself.
- The state welfare agency determines a child has special needs (more on that below).
Adopting a child with special needs
A special-needs adoption refers to children whose risk factors often make them more difficult to place, according to the state’s child welfare agency.
For this tax credit, a special needs child does not refer to children with disabilities.
When it comes to the adoption tax credit, a child has special needs if:
- The child is a citizen or resident of the United States or territories at the time of adoption.
- The state determines the child can’t or shouldn’t be returned to their parent’s home.
- The state determines the child wouldn't be adoptable without financial assistance.
There’s one exception: The federal tax credit is not available for foreign children with ‘special needs’ who are adopted.
What are qualified adoption expenses?
The adoption tax credit can also help you pay off certain adoption expenses, but you’ll have to fill out IRS Form 8839. The form will allow you to quantify the amount of your adoption credit and any employer-provided benefits you can exclude from your income.
Some qualified adoption expenses include, but are not limited to:
- Legal fees paid to your attorney and related court costs
- Fees you paid to an adoption agency
- Re-adoption expenses related to the adoption of a foreign child
You can also expense traveling costs — including the amount spent on meals and lodging away from home — that are directly related to the adoption process.
What isn’t a qualified adoption expense?
There are just six expenses that can’t be claimed under the adoption tax credit. The tax break does not cover:
- The adoption of stepchildren
- Paying fees or expenses related to surrogate parenting
- Expenses that have been reimbursed by your employer or otherwise
Additionally, the adoption credit doesn't cover expenses allowed as a credit or deduction under another federal tax code provision, or situations in which you have received funds under any state, local, or federal program.
Finally, you cannot claim adoption expenses that violate state or federal law.
Enhanced adoption tax credit under Trump tax bill
Trump’s major tax cuts and spending package, dubbed the ‘big beautiful bill,’ was signed into law on July 4, 2025. The legislation includes a provision that enhances the adoption tax credit.
- The new tax law makes the adoption tax credit partially refundable and indexes it to inflation, allowing parents to claim up to $5,000 in refundable adoption tax credit.
- Another provision allows Indian tribal governments to determine whether a child has special needs for the adoption credit.
- The amendments apply to taxable years beginning after December 31, 2024.
According to the Bipartisan Policy Center, the enhanced adoption tax credit is projected to cost $2 billion over 10 years. When evaluating nine major provisions that directly impact working families and children, like enhancements to the child tax credit, the tax cuts would total $2.1 trillion, and the tax offsets total about $2 trillion.
By enhancing the adoption tax credit and making up to $5,000 refundable, that’s some money that could return to your wallet.
Bottom line
Expenses associated with the adoption process can be daunting to some families.
In addition to the federal adoption tax credit, some states offer assistance programs for adopted children through the foster care system, like monthly cash payments, reimbursement for adoption expenses, and medical assistance.
Before starting your adoption journey, look into legitimate financial support programs in your state or speak with a trusted agency to determine whether assistance services are available.
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