Adoption tax credits under the One, Big, Beautiful Bill
Taxpayers who finalized an adoption in 2025 or started the adoption process before 2025, may qualify for the Adoption Tax Credit. Additionally, there have been significant changes to the tax credit under the One, Big, Beautiful Bill.
Here’s an overview of the credit and eligibility, including the recent changes:
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- The credit can be claimed for eligible expenses related to international, domestic, private and public foster care adoptions.
- The maximum Adoption Credit taxpayers can claim on their 2025 tax return is $17,280 per eligible child.
- This credit is now partially refundable, meaning taxpayers may get back more than what is owed in taxes The refundable amount is up to $5,000 per qualifying child for tax years 2025 and after. However, any nonrefundable amount carried forward can’t be used to calculate a refundable portion for future tax years.
- An eligible child must be younger than age18. If the adopted person is older, they must be unable to physically or mentally take care of themselves.
- Indian tribal governments now have the same authority as State governments to determine whether a child has special needs for the purpose of claiming the Adoption Credit. Taxpayers who adopt an eligible U.S. child with special needs may be able to claim the credit even if they didn’t pay any qualified adoption expenses.
- Taxpayers who adopt their spouse’s child can’t claim this credit.
- Taxpayers who carry out a surrogate parenting agreement do not qualify for the credit.
Taxpayers can also use the Interactive Tax Assistant to determine their eligibility.
Eligible expenses
- Reasonable and necessary adoption fees
- Court costs and legal fees
- Adoption related travel expenses like meals and lodging
- Other expenses directly related to the legal adoption of an eligible child
Expenses may qualify even if the taxpayer pays them before an eligible child is identified. For example, some taxpayers pay for a home study at the beginning of the adoption process. These taxpayers can claim the fees as qualified adoption expenses.
Taxpayers should complete Form 8839, Qualified Adoption Expenses, to figure how much credit they can claim on their tax return.
(Courtesy of the National Association of Tax Professionals – NSTP)