IRS Publication 6124 – Adopting a child is a life-changing journey that brings joy to many families, but it can also involve significant financial costs. Fortunately, the IRS offers the Adoption Tax Credit to help offset some of these expenses. IRS Publication 6124, titled “5 Things to Know About the Adoption Tax Credit,” provides a concise overview of this valuable benefit. This SEO-optimized guide breaks down the key points from the publication, updated with the latest information for tax year 2025 (filed in 2026). Whether you’re considering domestic, international, or foster care adoption, understanding this credit can make the process more affordable.
We’ll explore the five essential things to know, including eligibility, credit amounts, qualified expenses, and how to claim it. Note that tax laws can change, so always consult a tax professional or the IRS for personalized advice.
1. What Is the Adoption Tax Credit and Who Qualifies?
The Adoption Tax Credit is a federal tax benefit designed to reimburse families for qualified adoption expenses. It applies to adoptions of children under 18 (or any age if they have special needs) and covers domestic private adoptions, international adoptions, and public foster care adoptions. You cannot claim the credit for adopting a spouse’s child.
To qualify, you must have finalized the adoption or incurred expenses in a failed adoption attempt. For tax year 2025, your modified adjusted gross income (MAGI) must be $259,190 or less to claim the full credit. The credit phases out between $259,191 and $299,189, and it’s unavailable if your MAGI exceeds $299,190. This ensures the credit supports middle-income families building their homes through adoption.
2. How Much Is the Credit Worth?
For tax year 2025, the maximum Adoption Tax Credit is $17,280 per eligible child. This amount represents the cap on qualified adoption expenses you can claim. If you’re adopting multiple children, you can claim up to this amount for each one, potentially multiplying your savings.
A significant update starting in 2025: Up to $5,000 of the credit is refundable. This means if the credit exceeds your tax liability, you could receive up to $5,000 as a refund, even if you owe no taxes. The remaining non-refundable portion can be carried forward for up to five years but won’t generate additional refunds. For tax year 2026, the maximum increases to $17,670, with the refundable portion rising to $5,120 due to inflation adjustments.
3. What Expenses Qualify for the Credit?
Qualified adoption expenses include a wide range of costs directly related to the legal adoption process. Examples are:
- Adoption fees paid to agencies or attorneys
- Court costs and legal fees
- Travel expenses (like meals and lodging) for adoption-related trips
- Other necessary expenses, such as home studies or medical exams for the child
Expenses must be reasonable and not reimbursed by an employer or government program to qualify. For special needs adoptions through foster care, you may claim the full credit amount even if your actual expenses were minimal or covered by subsidies. Keep detailed records, as you’ll need to document these on Form 8839.
Note: Employer-provided adoption assistance (up to $17,280 in 2025) can be excluded from your gross income, providing additional tax savings.
4. When and How Can You Claim the Credit?
You can claim the Adoption Tax Credit in the year the adoption is finalized or, for expenses incurred before finalization, in the following tax year. For international adoptions, claims are typically made after finalization.
To claim it, file IRS Form 8839, Qualified Adoption Expenses, with your federal tax return. Attach supporting documents like adoption decrees, expense receipts, and any employer assistance statements. If carrying forward unused credit, track it across years. Filing electronically can speed up processing, especially if you’re expecting a refund from the refundable portion.
For adoptions finalized in 2025, you’ll claim the credit on your 2025 tax return, due in April 2026 (or later with an extension).
5. Key Changes and Tips for Maximizing the Benefit
Recent legislative changes, including those from the One, Big, Beautiful Bill, have made the credit more accessible by introducing the refundable component. This is a game-changer for families with lower tax liabilities, as it provides direct financial relief.
Tips to maximize your credit:
- Start tracking expenses early in the adoption process.
- Check if your employer offers adoption benefits for income exclusion.
- If your income is near the phase-out range, consider strategies to lower your MAGI.
- For foster care adoptions of children with special needs, the credit is often fully available regardless of costs.
IRS Publication 6124 emphasizes that this credit not only eases financial burdens but also encourages adoptions, particularly for children in need.
Conclusion: Making Adoption More Accessible
The Adoption Tax Credit, as outlined in IRS Publication 6124, is a powerful tool for families navigating the costs of adoption. With a maximum of $17,280 per child in 2025 and partial refundability, it provides substantial support. If you’re in the adoption process, download the publication from the IRS website for the official summary. Remember, while this guide is based on current trusted sources, tax situations vary—consult the IRS or a qualified advisor for the most accurate guidance.
For more details, visit the IRS Adoption Credit page or explore related publications like Form 8839 instructions. Adopting a child is rewarding, and this credit helps make it a reality for more families.