When you factor in all the legal, medical, and court expenses – plus any related travel and accommodations required — it’s no surprise that adoptions in America can easily climb to $45,000 or more. Fortunately, the adoption tax credit can reduce up to $17,280 of adoption-related expenses. In this article, we’ll explain who qualifies for the adoption credit and how to claim it on your tax return.
Who qualifies for the adoption tax credit?
You can claim the Adoption Tax Credit if you pay out-of-pocket to adopt a child under age 18, or a person who is physically and mentally incapable of caring for themselves. If you adopt your spouse’s child, you are not eligible to claim the credit.
If your employer reimburses you for any of your adoption costs, you can only claim the credit for non-reimbursed expenses. Continue reading for more information on employer reimbursements.
How much is the adoption tax credit?
For tax year 2025, the Adoption Tax Credit is worth up to $17,280 per eligible child for qualified adoption expenses. These include court costs and attorney fees, travel costs (food and lodging), and other expenses directly related to adopting a qualifying child. Under the One Big Beautiful Bill, up to $5,000 of this credit is refundable. If your tax liability is $0, the remaining credit can be carried forward for up to five years past the tax year in which the adoption was finalized.
The amount you can claim depends on the actual cost of the adoption and your modified adjusted gross income (MAGI). If your adoption costs are greater than or equal to $17,280, you can claim the full credit amount. The credit begins to phase out for taxpayers with a MAGI of $259,190 and goes to $0 if your MAGI is $299,190.
When to claim the adoption tax credit
The tax year you’ll claim the credit depends on when you paid your expenses, the year your adoption was finalized, and whether the adoption was domestic or foreign.
If you adopt a child who is already a U.S. citizen and the adoption is finalized this year, you can claim all your eligible expenses from the current year. You can also claim any unclaimed expenses from previous years, even if those costs normally wouldn’t be eligible until the following year.
If the adoption is not finalized yet when you file your taxes, you’ll need to wait and claim the tax credit for qualified expenses until the tax year after the year you paid them.
If you adopt a child from a foreign country, your expenses are allowable as a credit for the year the adoption is finalized.
My adoption is in progress. Can I get credit for my expenses this year?
If your adoption has not been finalized or it was unsuccessful by the time you file your taxes, you’ll claim the tax credit for the costs you paid in the tax year after the year you paid them. In subsequent years, the amount of the adoption credit you claim will need to be reduced by the amount you already claimed. For example, if you claim a credit for $3,000 this year for adoption efforts, you can claim the remaining $14,280 next tax year when your adoption is finalized.
How to claim the adoption tax credit
If your adoption qualifies for the adoption tax credit, you can claim it using Form 8839. This tax form helps you calculate the amount of your adoption credit, and any employer-provided adoption benefits you can exclude from your income. After completing Form 8839, you will enter your credit amount on line 1F of your 1040.
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Tax credits for an adopted child with special needs
Children with special needs for adoption differ from children with special needs for other purposes. To be clear, a child with a disability may not have “special needs” for adoption.
Generally, children with special needs for adoption purposes are considered “difficult to place” by the state’s child welfare agency. The following circumstances must apply:
- The child is a U.S. citizen at the start of the adoption process.
- The state determines that it’s unsafe for the child to return to their biological parents’ home.
- The state determines that the child won’t be adoptable without assistance provided to the adoptive family.
If your employer has a written qualified adoption assistance program, and you adopt a child that is considered “difficult to place” by the state’s child welfare agency, you might be eligible for the tax credit, even if you didn’t pay qualified adoption expenses.
The employer reimbursement exemption
If your employer pays some of your qualified adoption expenses – either directly to you or a third party – you can exclude the reimbursed amount from your taxable income, up to $17,280.
Say the final cost of your adoption efforts is $20,000 and your employer reimburses $5,000 of it. You can exclude the $5,000 from your income and take $15,000 of the tax credit. This means the entire cost of the adoption would be covered by the credit or exclusion.
If your final cost is $20,000 and your employer pays $10,000, you can exclude the $10,000 from your taxable income. The amount you can claim for the adoption tax credit is $10,000 ($20,000 total expenses – $10,000 employer reimbursement).
Note: Your employer will add your adoption benefits to Form W-2, but you’ll need to complete Part III of Form 8839 and include the form with your return.
Deducting charitable donations for adoption
To assist a family with their adoption-related expenses, you may choose to donate to an IRS-approved 501(c)(3) organization. In this case, your donation may qualify as a tax write-off if you itemize your deductions.
