Adopting a Child: What the Adoption Tax Credit Means to You, Updated for 2026

The adoption tax credit has been in place since 2013 and has gone through several updates since then, most recently under the One Big Beautiful Bill Act signed in 2025. The credit amount, income thresholds, and refundability rules have all changed. What follows covers how the credit works today and what adoptive parents need to know when filing.

If you or someone you know are thinking about adopting a child, you’ll want to be aware of the federal adoption tax credit to offset the costs of the adoptive process.

The 2025 federal adoption tax credit is $17,280 and is a subsidy rather than a deduction (more on the difference here). This means that it is a dollar-for-dollar reduction of total tax liability that goes straight into the pocket of prospective adoptive parents. For the 2026 tax year, the credit increases to $17,670, adjusted for inflation.

Ruled in 2013 as a permanent tax credit, it’s intended to climb each year in accordance with the cost of living. Currently the adoption tax credit is available in full to prospective parents with modified adjusted gross incomes of equal to or less than $259,190. Those with modified adjusted gross income in excess of $259,190 but less than $299,190 are eligible for a reduced tax credit. Those with modified adjusted gross income equaling or exceeding $299,190 forfeit eligibility.

The adoption tax credit may be applied only toward any qualified adoption expenses, including adoption agency, court, and attorney fees or any expenses related directly to the adoptive process, such as travel and lodging costs. Regardless of whether the expenses are incurred in a domestic or international adoption, eligibility is the same. Further, adopting a child with special needs allows prospective parents to claim the entire tax credit even if adoption expenses have been less than $17,280.

The adoption tax credit can be claimed in the year following adoption expenses if the child is U.S.-born or a resident alien. However, if the adoption is finalized in the same year in which the expenses were incurred, the tax credit may be claimed in that year. For expenses incurred in the year following the finalization of the adoption, the tax credit may be claimed in the year the expenses were incurred. The tax credit may be claimed in international adoptions only after finalization.

Even if a prospective parent’s attempt to adopt is unsuccessful, they are still eligible to claim the tax credit to reimburse the costs of trying. So long as the adoption is domestic, costs incurred in the attempt to adopt are treated by the IRS in the same way as costs incurred in adoptions that are successfully finalized. Unlike domestic adoptions, international adoptions must be successfully finalized to claim the tax credit.

To claim the adoption tax credit, prospective parents must complete Form 8839 “Qualified Adoption Expenses” and include the form with their Form 1040. Generally speaking, for married couples to claim the tax credit they must file jointly. Proof of qualified expenses must be documented and submitted to the IRS, so retention of adoption-related receipts, invoices, and financial records is critical.

What Changed Under the One Big Beautiful Bill Act

Starting with tax year 2025, the adoption tax credit became partially refundable for the first time. Previously, the credit was nonrefundable, meaning it could reduce your tax bill to zero but any remaining credit was carried forward rather than returned to you as a refund. Now, up to $5,000 of the credit per qualifying child is refundable, which means it can generate a refund even if your tax liability is less than the credit amount. Any nonrefundable portion that remains can still be carried forward for up to five years.

The One Big Beautiful Bill Act also expanded special needs adoption rules. Beginning in 2025, Indian tribal governments have the same authority as state governments to determine whether a child has special needs for purposes of the adoption credit. Families who adopt a child that a state or Indian tribal government has designated as having special needs may be able to claim the full credit even if they did not pay any qualified adoption expenses, provided they meet the income requirements.

For the 2025 tax year, both the taxpayer and the qualifying child must have a valid Social Security number to claim the credit. Additional detail on current eligibility rules, the refundable portion, and special needs documentation can be found on the IRS adoption credit page – here.

Though adoption may be a challenging process, filing your taxes shouldn’t be. Whatever your filing status, at E-file.com you’ll find ease of access, filing simplicity, and free professional tax support to ensure that as a prospective adoptive parent you receive the qualifying adoption tax credit to offset the expense of what may be your most important quest.

Note: Tax laws may change with little notice. We do our best to keep this information current, but it is provided on an “AS IS” basis. It is should not be considered, legal, financial, or other professional guidance. For more, see our terms.