The Adoption Tax Credit

The adoption tax credit is a bipartisan credit that has existed since 1997. It advances an important public goal by encouraging domestic and international adoptions, expecially for children with special needs who otherwise might linger in costly foster care. By offsetting some of the costs of adoption or of caring for a child with special needs, the tax credit makes adoption a more viable option for many children and families. This credit is currently at risk because efforts at comprehensive tax reform have targeted it for elimination.

In 2015, families adopting children can claim up to $13,400 per child. Qualified expenses include adoption fees, attorney fees, court costs, travel expenses, and re-adoption expenses for intercountry adoptions. Families who adopt a child whom the state determines has secial needs can claim the maximum credit regardless of their actual expenses.  Familes can benefit only if they have federal income tax liability. Current law allows it to be applied toward liability over a six year period.

A study conducted by Barth et al.  and reported by the federal Children’s Bureau, showed that the government saves between $65,000 and $127,000 for each child who is adopted rather than placed in long term foster care. Studies have shown that youth who are adopted are more likely to be contributing members of society. When compared to their peers who age out of care, adopted youth are more likely to complete college, be employed, and earn adequate income.