Adoption Tax Credit 2025: What You Need to Know

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 nonrefundable tax credit designed to provide relief for the qualified costs related to the adoption of a child. The credit is adjusted for inflation each year and increased for 2025 (tax returns you’ll file in early 2026.)

The credit is available for each child adopted, whether via public foster care, domestic private adoption or international adoption. Because it’s a nonrefundable credit, if you don’t use the entire credit amount, you can carry the unused portion forward for up to five years.

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In the news: Republican lawmakers aim to enhance the adoption tax credit in their version of President Donald Trump’s comprehensive tax and spending cuts megabill. The partisan measure passed the House floor in May and will likely face changes in the U.S. Senate before a vote is cast.

If you’re interested in adopting or have adopted a child and believe you might qualify for the credit, here’s what you need to know.

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 nonrefundable tax break, the credit can reduce your tax liability to zero. However, you won’t get a refund if the expenses you incurred are lower than the maximum credit amount.

• For tax year 2025 (returns you'll file in early 2026), the maximum adoption credit amount is $17,280.
• For the 2024 tax year (returns you likely already filed in early 2025), the maximum credit amount was $16,810.

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.

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.

Will the adoption tax credit get enhanced next year?

Republican lawmakers passed their version of Trump’s major tax cuts and spending package, dubbed ‘One Big Beautiful Bill,’ through the House floor, and the markup includes a provision that aims to enhance the adoption tax credit.

• The bill would make the tax break partially refundable and index it to inflation, allowing parents to claim up to $5,000 in refundable adoption tax credit.
• Another provision would allow Indian tribal governments to determine whether a child has special needs for the adoption credit.
• If made into law, the amendments would apply to taxable years beginning after December 31, 2024.

Currently, taxpayers can claim a non-refundable credit up to $17,280 in 2025. As a non-refundable credit, the tax break can lower your tax bill, sometimes to zero. However, you won’t receive the credit back as a refund, even if the amount exceeds your tax liability.

According to the Bipartisan Policy Center, the provision would cost $2 billion over 10 years. When evaluating nine major provisions that directly impact working families and children, such as 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.

Adoption doesn’t have to be expensive

There are some misconceptions when it comes to expenses associated with the adoption process, and it 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, such as monthly cash payments, reimbursement for adoption expenses, and medical assistance.

Before starting your adoption journey, look at your state’s available programs or speak with a trusted agency to find out if assistance services are available.

Keep in mind, as mentioned, GOP lawmakers in Congress are aiming to enhance the adoption tax credit and make it partially refundable. That, and other major provisions to family tax breaks, could help offset some of the costs tied to the process of growing your family, so stay tuned.

Related Content

• Child Tax Credit 2025: How Much Is It?
• IRS Announces Family Tax Credit Amounts for 2025
• Trump’s ‘One Big, Beautiful Bill’ With Trillions in Tax Cuts