What You Need to Know About the Adoption Tax Credit in 2026
Source: National Council for Adoption
Adopting a child is one of the most profound decisions a family can make — and it’s no secret that the process can come with significant costs. The good news? The federal Adoption Tax Credit (ATC) exists specifically to help families like yours navigate those expenses, and for 2026, it’s more valuable than ever.
Whether you’re just beginning to explore adoption or you’re in the final stages of finalizing your placement, understanding the ATC can make a real difference in your financial planning. Here’s what you need to know.
What Is the Adoption Tax Credit?
The Adoption Tax Credit is a federal tax benefit that helps offset the out-of-pocket costs of adopting a child. Unlike a tax deduction — which simply reduces your taxable income — a tax credit is subtracted directly from what you owe the IRS. That makes it far more powerful, dollar for dollar.
The credit is adjusted for inflation each year, and it’s now permanent law, meaning it isn’t scheduled to expire. That said, “permanent” doesn’t mean untouchable — future legislation could still change it — so it’s wise to take full advantage of it while it’s available in its current, generous form.
How Much Is the Credit Worth?
The maximum credit amounts for recent years are:
- 2026 (filed in 2027): $17,670 per child
- 2025 (filed in 2026): $17,280 per child
- 2024 (filed in 2025): $16,810 per child
- 2023: $15,950 | 2022: $14,890 | 2021: $14,440
The credit is calculated per child, which is great news for families adopting more than one child in the same year — you may be eligible to claim the credit for each child separately.
Big News: The Credit Is Now Partially Refundable
As of July 2025, the Adoption Tax Credit became partially refundable — a significant development for many families.
Previously, if your federal tax liability was less than the full credit amount, you simply lost the difference. Now, if your tax liability falls short of the full credit, you can receive up to an additional $5,000 back for adoptions finalized in 2025, and up to $5,120 for adoptions finalized in 2026. This means more families — especially those with lower tax liabilities — can actually benefit from the full value of the credit.
Do You Qualify?
Income plays a role in eligibility. For 2026, here’s how it breaks down based on your Modified Adjusted Gross Income (MAGI):
- Below $265,080: Full credit available
- $265,081 – $305,079: Partial credit available
- Above $305,080: Credit is not available
For 2025, the thresholds are slightly lower: full credit below $259,190, partial credit up to $299,189, and no credit above $299,190.
What Expenses Qualify?
Almost any expense that is necessary and reasonable for completing an adoption can qualify, including:
- Court and attorney fees
- Agency fees
- Home study costs
- Travel and meals during the adoption process
- Dossier preparation
- Re-adoption expenses for internationally adopted children
One notable exception: birth mother expenses generally do not qualify.
Also worth noting — families who adopt a child with special needs through the state foster care system may qualify for the full credit amount even with zero qualifying expenses, as long as the child is declared special needs under their state’s criteria.
When Can You Claim It?
The timing depends on the type of adoption:
- Foster care and intercountry adoptions must be finalized before you can claim the credit.
- Domestic adoptions offer a bit more flexibility — you can claim the credit either after finalization or in the tax year following the payment of qualifying expenses.
If you’re adopting through an agency like Hope’s Promise, your social worker can help you track expenses and documentation throughout the process so you’re well-prepared come tax time.
Hope’s Promise: A Partner for Your Entire Adoption Journey
If you’re considering adoption in Colorado — whether domestic, international, or through foster care — Hope’s Promise is a trusted partner with more than 35 years of experience.
Our services span the full adoption journey — from your initial consultation and home study to post-placement support. We also offer free options counseling for women and men facing unintended pregnancies, and our orphan care programs support vulnerable children in Kenya, Vietnam, Nepal, Zimbabwe, and beyond.
For families pursuing adoption, Hope’s Promise will help ensure you have the documentation you need — home study, receipts for qualifying expenses, and final judgement of adoption — to successfully claim the Adoption Tax Credit.
What Paperwork Do You Need to Claim the Credit?
When it comes time to file, be sure you have:
- All adoptions: Final Judgement of Adoption
- Foster care adoptions: Subsidy Agreement declaring the child to have special needs per your state’s criteria
- Domestic and intercountry adoptions: Home study and receipts for all qualifying expenses
A Few Other Things to Keep in Mind
Carry-forward rules: If your tax liability is lower than the total credit in year one, you can carry the unused portion forward for up to five years — but only if you were eligible to claim it in the first place. If your income was too high to claim the credit in the year the adoption was finalized, you cannot carry it forward.
Second-chance adoptions: If you’re adopting a child who was previously adopted by another family (who already claimed the ATC for that child), you can still claim the credit — just be prepared for the IRS to request additional documentation.
Disrupted adoptions: If a domestic adoption falls through, you may still be able to claim expenses — though any credit received will be subtracted from what you can claim in a subsequent successful adoption.
Ready to Take the Next Step?
The Adoption Tax Credit is one of the most meaningful financial tools available to adoptive families, and when paired with the right agency support, your path to growing your family becomes a little more manageable.
If you’re in Colorado and ready to begin your journey, Hope’s Promise is here to walk alongside you — every step of the way. Visit hopespromise.com to learn more or register for an upcoming information meeting.
This blog post is for informational purposes only and is not intended as tax or legal advice. Please consult a qualified tax professional for guidance specific to your situation.
