A bipartisan coalition of lawmakers is advocating for the adoption tax credit to be made refundable, which would enable more families to benefit from the credit even if it surpasses their federal tax liability. The “Adoption Tax Credit Refundability Act” has been put forward by both Republican and Democratic members from the House and Senate, reflecting similar legislative efforts in previous years.
Under the current tax regulations, families can claim “qualified expenses” for adoption on their taxes up to $16,810, but they are unable to receive a refund if their tax payments exceed this amount. Previously, the credit was refundable only in 2010 and 2011, according to Families Rising. If enacted, the new legislation would take effect in 2025.
Senator Mark Kelly of Arizona expressed that adoption offers families the chance to become complete, though associated costs often make it unaffordable for many. Making the tax credit refundable would help more families provide a child with a safe and loving home. Similarly, Senator Kevin Cramer of North Dakota remarked that while adoption brings joy, it also involves substantial financial commitments. The proposed bill aims to make the credit refundable to ensure all adoptive families can fully access the credit amount, irrespective of their tax obligations. This support is crucial to ensure more children secure stable, loving homes.
In 2024, the adoption tax credit was available to families with earnings of $252,150, with a reduced credit offered to those earning up to $292,150, according to the Internal Revenue Service (IRS). The IRS specifies that adoption expenses can include fees related to the adoption, legal, and travel costs. However, those adopting a spouse’s child or using a surrogate are not eligible. The credit is also applicable to international adoptions.
As the federal tax filing deadline recently passed, discussions remain active in Capitol Hill regarding the effort to make the Tax Cuts and Jobs Act of 2017 permanent as part of ongoing policy debates.
