The Adoption Tax Credit: Your 2025 Guide

Understanding the Adoption Tax Credit: A Complete Guide for 2025

Adopting a child is a life-changing decision with immeasurable rewards for both child and parent, but it’s also a significant financial investment. The federal adoption tax credit is designed to make adoption more affordable by reducing taxes for families who’ve adopted a child.

We will provide an overview of the adoption tax credit for the 2025 tax year, including information on who can claim the tax credit, how much credit you can claim, and how you can claim it. Whether you’ve already completed an adoption or are just beginning your adoption journey, learning about the adoption tax credit can help you plan and budget for adoption costs.

What Is the Federal Adoption Tax Credit?

The adoption tax credit is a federal tax credit that helps offset the considerable costs of adopting a child by allowing families to claim adoption-related expenses when filing their taxes. The tax credit was previously nonrefundable—which meant that the credit could reduce your tax bill to as low as zero dollars, but would not provide a refund. However, starting with the 2025 tax year, the tax credit will be partially refundable (see more details below).

The Maximum Credit Amount for 2025

For the 2025 tax year, the maximum adoption tax credit is $17,280 per child. (For the 2024 tax year, the maximum credit was $16,810 per child.) This means families who finalize an adoption in 2025 can claim up to $17,280 in adoption tax credits when filing their 2025 taxes. If you withheld taxes during the year, you might receive a refund for those taxes if your tax bill is reduced to zero and you still have credit left over.

Credit vs. Deduction: What’s the Difference?

A tax credit is subtracted directly from your amount of taxes due, whereas a tax deduction is subtracted from your income. A tax credit is generally more valuable than a tax deduction because it reduces your tax bill dollar for dollar, whereas deductions minimize the amount of income that will be taxed.

Since the adoption tax credit is a credit, not a deduction, you will subtract it from your tax bill after you have calculated what you owe. For example, if you owe $5,000 in taxes and your adoption tax credit is $11,000, your taxes will be reduced to zero and you will have $6,000 of unused credit.

Who Is Eligible for the Adoption Tax Credit?

The Qualifying Child Standard

In order to qualify for the adoption tax credit, an adoptee must meet certain criteria as defined  by the IRS. The credit only applies to families if they are adopting:

• A child under 18 years old, or
• A person of any age who has been deemed physically or mentally incapable of self-care

Income Limits for 2025

The amount of adoption tax credit that families receive is mostly determined by income. Families who earn above a certain amount do not qualify for the credit, with the income cutoff changing every year to account for inflation. 

For 2025, families with a modified adjusted gross income (MAGI) of $259,190 or less will be eligible for the full tax credit. The credit starts to phase out for taxpayers with a MAGI of over $259,190, and the credit is completely phased out for families earning $299,190 or more.

• If your MAGI is $259,190 or less… you are eligible for full tax credit
• If your MAGI is between $259,191 and $299,189… your tax credit will be reduced
• If your MAGI is $299,190 or more… you are not eligible for the tax credit

If you are filing 2024 taxes, you are eligible for full credit if your MAGI is $252,150 or less. If your MAGI is between $252,151 and $292,149, your credit will be reduced. If your MAGI is $292,150 or more, you will not receive any adoption tax credits.

What Are "Qualified Adoption Expenses"?

A qualified adoption expense is an expense considered “reasonable and necessary” to the adoption process. You can use these expenses toward your adoption tax credit.

Expenses That Typically Qualify:

Some qualified adoption expenses include:

• Reasonable and necessary adoption fees: These are fees you pay to an adoption agency to help facilitate the adoption.
• Court costs and attorney fees: Families may hire a lawyer to help navigate adoption laws and legal issues that arise during the adoption process. You may also need to pay filing fees with courts.
• Traveling expenses while away from home: Adoptions often require travel away from home, whether it’s to meet the child or participate in legal proceedings related to the adoption. Qualified expenses include lodging, plane tickets, meals, and cost of gas during travel.
• Re-adoption fees to adopt a foreign child: Parents who adopt a child in another country will often re-adopt the child in the U.S., in order to establish a legal parent/child relationship recognized by the U.S. Fees incurred during this legal process, such as lawyer or court fees, are qualified expenses.
• Certain expenses paid before an eligible child has been identified: Some adoption-related expenses may qualify even if a child has not yet been identified, such as fees for a home study or background check.

Expenses That Do Not Qualify:

• Expenses for adopting a spouse's child (stepparent adoption): You cannot claim the tax credit for the adoption of a stepchild.
• Costs for a surrogate parenting arrangement: Any costs incurred during a surrogate parenting adoption do not qualify for the tax credit.
• Expenses that are reimbursed by an employer: Employers sometimes offer adoption assistance as a benefit to employees. Expenses that have already been reimbursed by employers do not qualify for the tax credit. That said, you may be able to exclude the reimbursed expenses from your income if it meets certain requirements.
• Expenses paid by a federal, state, or local program: Any expenses that have already been paid for by a government program will not qualify for the tax credit. 

When to Claim the Credit: Timing by Adoption Type

For Domestic Adoptions (Not from Foster Care)

If you are adopting a child in the U.S. and the child is not in foster care, your timeframe for claiming the tax credit will vary depending on when the expenses were paid and when the adoption was finalized.

If you paid the qualifying expenses in any year before the adoption is finalized… you can claim the credit in your tax return for the year after the expenses were incurred.

Example: You paid $2,000 in expenses in 2023 and $3,000 in 2024, and the adoption was finalized in 2025. You can claim $2,000 on your 2024 tax return (which would be due in 2025), and you can claim $3,000 in expenses in your 2025 tax return (due in 2026).

If you paid the qualifying expenses in the same year the adoption became final… you can take the credit the year the adoption became final.

Example: You paid $5,000 in expenses in 2025 and the adoption was finalized in 2025. You can claim the credit in your 2025 tax return (which would be due in 2026).

For International Adoptions

If you adopt a child from another country, you can only claim your adoption tax credit for the year the adoption is finalized. Any expenses incurred in the years prior cannot be claimed until the adoption is finalized.

Example: You paid $2,000 in expenses in 2022, $3,000 in 2023, and $4,000 in 2024, and the adoption was finalized in 2024. You must file all $9,000 in expenses in your 2024 tax return (which would be due in 2025).

For Adoptions from Foster Care (Special Needs)

The IRS defines a child with special needs as a child who meets certain qualifications as defined by the State. If you adopt a child with special needs, and you received an adoption subsidy, you may be eligible for the maximum tax credit even if you don’t have adoption expenses. In most cases, children with special needs who are adopted are adopted from the foster care system.

If you adopt a child with special needs and you are not claiming any expenses, you can claim your tax credit in the tax year that the adoption is finalized.

Example: You adopt a child with special needs and the adoption is finalized in 2024. You can claim the credit in your 2024 tax return (which would be due in 2025). 

How to Claim the Adoption Tax Credit

In order to claim your adoption tax credit, you must complete Form 8839 (“Qualified Adoption Expenses”) and file it with your federal tax return (Form 1040). Read the instructions for Form 8839 to ensure you are completing the form correctly. 

Keep meticulous records and receipts throughout the adoption process, since these will be essential for you or your tax professional to accurately calculate your maximum tax credit. Although you are not required to submit receipts or adoption documentation, the IRS recommends keeping all adoption documentation with your records in case of an audit.

Frequently Asked Questions (FAQ)

Question: What if my tax liability is less than the credit amount?

Starting with the 2025 tax year, the adoption tax credit is partially refundable. So if you owe less than the amount of your tax credit, the unused credit will go toward a refund of up to $5,000. If there is still credit remaining after the $5,000 refund, you can carry it forward to future tax years for up to five years.

Question: Can I claim the credit for an incomplete adoption attempt?

Yes, but only for domestic adoptions. If you experience an incomplete U.S. adoption, you are still eligible for the adoption tax credit. You can claim the credit for the tax year following the year the expenses were paid. For example, if you paid the expenses in 2023, you can claim your tax credit in your 2024 tax return. That said, if you complete an adoption in the future, whatever credit you receive from the incomplete adoption will be subtracted from your credit for the complete adoption.

You cannot claim the adoption tax credit for incomplete international adoptions.

Question: Can I amend a prior year’s tax return to claim the credit?

Yes, you can amend tax returns within a certain timeframe. If you would like to change your adoption tax credit, you will need to file Form 1040-X. The amended return must be filed within three years of the date that you filed the original return or within two years of the date you paid the tax on your original return (whichever one is later). Check with a tax professional to make sure you are following the proper steps.

Your Best Resource: A Knowledgeable Tax Professional

Tax laws are complex and subject to change—and every family and adoption is unique. If you would like to claim an adoption tax credit, you may benefit from a qualified financial advisor or tax professional who has prior experience filing for the adoption tax credit. Tax professionals with experience in adoption will know how to navigate the intricacies of the adoption tax credit, so they can help ensure your family is receiving the maximum benefits possible.