Tax credit for adoption from foster care?

The IRS definition leaves it up to the individual states to determine what children are "special needs". Basically, if the child is eligible for adoption assistance from their state, then they meet the IRS definition for "special needs" and you can take the entire credit. You can check with your state guidelines to see what qualifies a child for adoption assistance. It varies considerably from state to state. Some states (i.e. California) classify virtually all children adopted from foster care as "special needs", whereas others have restrictions based on age, race, or emotional and/or physical disability.