Adopting a child often comes with significant legal, agency, and travel costs — the federal Adoption Tax Credit exists specifically to offset a meaningful share of those expenses for families who qualify.
What expenses qualify
Qualifying adoption expenses generally include reasonable and necessary adoption fees, court costs, attorney fees, and travel expenses (including meals and lodging while away from home) directly related to the legal adoption of a child. The child does not need to have special needs for these ordinary expenses to qualify, though special-needs adoptions have their own separate, more favorable rule described below.
The special-needs adoption exception
If a state determines a child has special needs for adoption assistance purposes, families adopting that child may claim the full maximum credit regardless of their actual qualifying expenses — even if the family spent little or nothing out of pocket on the adoption itself. This is a meaningful distinction worth confirming with your adoption agency or state child welfare office.
Income phase-out
The Adoption Tax Credit phases out at higher modified adjusted gross income levels, with the exact phase-out range adjusted annually for inflation. Families near the threshold should check the current-year figures before assuming the full credit applies to their situation.
When you can claim it
For a domestic adoption, expenses paid in a year before the adoption becomes final can generally be claimed the year after they were paid, while expenses paid in the year the adoption becomes final (or after) are claimed that same year. For an international adoption, expenses generally aren't claimed until the year the adoption becomes final, regardless of when they were paid.
Frequently asked questions
Is the Adoption Tax Credit refundable?
No, it is generally nonrefundable, though any unused credit can typically be carried forward for up to five years until it's fully used against tax owed.
Does the credit cover a stepparent adopting a stepchild?
No — the Adoption Tax Credit generally does not apply to the adoption of a spouse's child.
What if my adoption falls through after I've already paid expenses?
Qualifying expenses paid toward an unsuccessful domestic adoption attempt can generally still be claimed, subject to the normal timing rules for when expenses paid before finalization are claimed.