Adoption Tax Credit 2024: Increased Benefits & 2025 Projections

Adopting into your family can be a really great thing, but it often comes at a huge price. Luckily, there’s a federal tax break that could ease some of the burden.

The adoption tax credit is a nonrefundable tax credit intended to help reduce the cost to the taxpayer for the qualified costs of adopting a child. The inflation-adjusted credit has been increased for 2024. In addition, the IRS just recently announced an upward inflation adjustment to one of the most important family tax breaks—the adoption tax credit—and all such other ‘family’ tax breaks, which you will include on your tax returns filed early in 2026.

Understanding the Adoption Tax Credit

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The adoption tax credit is a significant credit that you may be able to take if you are considering adoption or have already brought a child into your family. This credit is available for each child adopted, no matter what avenue through which they were adopted, including public foster care, private domestic adoption, or international adoption. One of its benefits is its flexibility: any unused portion is carried forward as a nonrefundable credit for up to five years so that you really do benefit fully in the long run.

2024 Adoption Tax Credit Amounts

The adoption tax credit for 2024 is meant to help eliminate the financial burden typically involved in adoption. This credit can make a huge difference if you’re adopting domestically, privately, through foster care, or even internationally.

The reason that it’s not is that it’s a nonrefundable tax break, which, among other things, can lower your tax liability to zero. But if your expenses are less than the maximum credit, you don’t get a refund for the difference.

• Domestic Adoption: Both private and foster care adoptions inside the country.
• International Adoption: Adopts children from other countries.
• Nonrefundable Nature: It is a credit against tax liability, not a refund for expenses below the credit amount.
• Carry Forward Option: Unused credits can be carried forward up to five years, so you can redeem your benefit at your own pace.

These insights will help adopting families with the financial part and enjoy the joy of growing their families.

For those planning to file their tax returns in early 2025 for the 2024 tax year, there’s good news: In 2024 the maximum adoption credit has grown to $16,810, up from $15,950 in 2023. The amount will rise further to $17,280 looking ahead to 2025 (return filed early 2026).

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