Federal Adoption Tax Credit 2025: How to Claim It, Eligibility & Amounts

Claiming the Federal Adoption Tax Credit for 2025

Updated January 2026

For adoptions finalized in 2025, there is a federal adoption tax credit of up to $17,280 per child. The 2025 adoption tax credit is newly partially refundable, which means taxpayers access $5,000 of the credit plus what they can use against their federal income tax liability (see below). This new refundable portion only applies to new credit, it does not apply to credit carriedfoward from 2020-2024 into 2025.

The credit applies one time for each adopted child and should be claimed when taxpayers file taxes for 2025.

To be eligible for the credit, parents must:

• Have adopted a child other than a stepchild — A child must be either under 18 or be physically or mentally unable to take care of him or herself.
• Be within the income limits — Income affects how much of the credit parents can claim. In 2025, families with a modified adjusted gross income below $259,190 can claim full credit. Those with incomes from $259,191 to $299,190 can claim partial credit, and those with incomes above $299,190 cannot claim the credit.

The Amount of Credit to Be Claimed

Families who finalize the adoption of a child with special needs in 2025 and fulfill the eligibility requirements above, can claim the full credit of $17,280 whether or not they had any expenses. (This doesn’t mean they will actually receive a refund—claiming is different from being able to benefit. See below.)

Example — A woman adopts three of her grandchildren from foster care, and the state paid all of the fees. All three children receive monthly adoption assistance benefits and thus are considered special needs. Because the grandmother earns less than $259,190, she can claim the full credit of $17,280 per child for a total of $51,840.

Other adopters can claim a credit based on their qualified adoption expenses, which are the reasonable and necessary expenses paid to complete the adoption that have not been reimbursed by anyone else. If the expenses are less than $17,280, the adopters claim only the amount of those expenses. However, if the expenses exceed $17,280, the adopters can claim up to, but no more than, $17,280, per child.

Example — A couple adopted two children from China and had $40,000 in legal, travel, and agency fees. They received employer reimbursement of $20,000 (which can be excluded from their income), leaving them with $20,000 in qualified adoption expenses. They can claim only $20,000 (not the maximum $34,560 they might have been eligible for had their expenses been higher). If their modified adjusted gross income was between $259,191 and $299,190, they would receive only a portion of the credit, since the credit begins to phase out at $259,191.

When to Claim the Credit

Parents who adopt a child with special needs and are not basing their request on expenses should claim the credit the year of finalization. Parents who adopt internationally cannot claim the credit until the year of finalization. Parents who are adopting from the U.S. and claiming qualified adoption expenses can claim the credit the year of finalization or the year after they spent the funds. To claim the credit a year after the expenses have been paid, there is no requirement that a child nor expectant mother have been identified. The prospective adoptive parent may have to provide information about the agency or attorney they are working with and paying qualified adoption expenses to.

Example — A family begins adopting a U.S. infant in 2023 and incurs $4,000 in expenses in 2023, $5,000 in 2024, and $13,000 in 2025. The adoption finalizes in 2025. The parents must claim the $4,000 spent in 2023 on their 2024 taxes. They will claim the $5,000 and $13,000 when they file their 2025 taxes.

Qualifying as Special Needs

Families who finalized the adoption of a child who has been determined to have special needs in 2025 can claim the full credit (still subject to income limits) of $17,280 regardless of their adoption expenses. The credit for all other adopted children is based on the family’s qualified adoption expenses.

Basically, a child with special needs is a child in U.S. foster care who receives adoption subsidy or adoption assistance (from the child welfare agency not an employer) program benefits (which can include a monthly payment, Medicaid, or reimbursement of nonrecurring expenses). The instructions for the 2025 tax credit explain that to be considered a child with special needs, the child must meet all three of the following characteristics:

1. “The child was a citizen or resident of the United States or its possessions at the time the adoption effort began (US child).
2. A state (including the District of Columbia) or Indian tribal government has determined that the child cannot or should not be returned to his or her parents’ home.
3. The state of Indian tribal goverment has determined that the child will not be adopted unless assistance is provided to the adoptive parents. Factors used by states to make this determination include:
   • The child’s ethnic background and age,
   • Whether the child is a member of a minority or sibling group, and
   • Whether the child has a medical condition or a physical, mental, or emotional handicap.”

Just because a child is disabled does not mean the child is considered special needs. No child adopted internationally is considered special needs for the adoption tax credit. Not even every child adopted from foster care is considered special needs (about 10 percent of children adopted from care do not receive adoption assistance support). Those who do not receive any support from the adoption subsidy/assistance program are likely not to have been determined to have special needs.

Bottom line, if your child does not receive adoption subsidy/adoption assistance benefits, you will need to have qualified expenses to claim the credit.

Interaction with the Child Tax Credit

In 2025 the Child Tax Credit is only partially refundable for children ages 0-16 years old. In 2025 this credit will interact and likely reduce the amount of the Adoption Tax Credit that is used. If you are claiming a Credit for Other Dependents that will still reduce the amount of the Adoption Tax Credit you are able to use this year. If a family has enough earned income, the Child Tax Credit may split the $2200 in to the non refundable Child Tax Credit and refundable Additional Child Tax Credit. This is calculated by software in Schedule 8812. The maximum split for children under 17 is $500 non-refundable and $1,700 refundable.

How Much Taxpayers Will Benefit

For 2025, any new credit claimed will be able to use $5,000 (subject to income phaseout) as refundable plus what they can use against their federal income tax liability in 2025 (and for the next five years). The amount used against tax liability, which is the amount on line 18 of the Form 1040 less certain other credits (see Child Tax Credit above). Taxpayers have six years (the year they first claimed the credit plus five additional years) to use the credit, none of the carryforward is refundable in later years.

People who do not have federal income tax liability WILL benefit this year for new credit claimed. Families who normally don’t need to file taxes, should this year. The partial refundability only applies to new credit claimed and only in the first year of that credit. It does not apply to any carryforward from past years, or for 2025 credit carried forward into 2026.

Below are a couple of examples of how the tax credit might benefit families who finalized adoptions in 2025. (These are simplified examples.)

Example 1 — A couple adopted two brothers who had been determined to be special needs. The parents had $6,500 in federal income tax withheld from their paychecks, and their tax liability is $7,000, which means they would normally owe $500 to the IRS. Their adoption tax credit is $34,560. They use $1,000 in child tax credit and $6,000 in adoption tax credit on their 2025 taxes. They get a refund of the $19,900—the $6,500 they already paid plus $3,400 in additional child tax credit plus $10,000 in refundable adoption tax credit, and can carry over $18,560 to use against tax ability for the next five more years. None of the carryforward will be refundable.

Example 2 — A couple adopted three siblings with special needs. They had $1,000 in federal income tax withheld from their paychecks, and their tax liability is $0, which means they would receive a refund of $1,000 without the adoption tax credit. They have $51,840 in the adoption tax credit, since the Adoption Tax Credit is partially refundable, they will get a refund of $16,000 – the $1,000 they already paid plus $15,000 in refundable Adoption Tax Credit. They will have $36,840 but if they have no tax liability in the years 2026-2030 they won’t be able to use any of it.

Claiming the Credit

To claim the credit, taxpayers will complete a 2025 version of IRS Form 8839 and submit it with their Form 1040 when they file their 2025 taxes, most tax software will create this form for you. Before filing, taxpayers should review 2025 Form 8839 instructionsOpens in a new tab very carefully to be sure that they apply for the credit correctly and to see if anything has changed. The instructions are needed to calculate how much of the credit will be used.

The instructions state that taxpayers may e-file their tax return to claim the adoption tax credit, there is no requirement to paper file the return. There is no requirement to submit documentation in 2025 (documentation was required in 2010 and 2011 when the adoption credit was fully refundable).