Adoption Tax Credit (for Adoptions Finalized in 2025)

by | Dec 30, 2025 | Blog

The 2025 tax filing season is here! If you are an adoptive family, you may be eligible for the Federal Adoption Tax Credit, which can help offset the costs of adopting a child. Wyoming Children’s Society (WCS)  has put together this guide to give you a clear overview of the credit and how it works.

Note: WCS does not provide tax advice. Please consult a tax professional to determine how the Adoption Tax Credit applies to your situation.

Key Facts at a Glance

  • The 2025 Adoption Tax Credit applies to qualifying adoption expenses incurred in 2025.

  • Maximum credit per child: $17,280.

  • A portion of the credit may be refundable (subject to IRS rules).

  • Special rules apply for children with special needs.

  • The credit is claimed when you file your 2025 federal income taxes in early 2026.

Adoption Tax Credit 101 – for 2025 adoptions (claimed in early 2026)

If you have done any research into adoption financing, you’ve probably heard about the Federal Adoption Tax Credit. But what exactly is this credit, and how does it work?

The Federal Adoption Tax Credit is a non-refundable tax credit that helps families offset the costs of qualifying adoption expenses. Families who paid qualifying adoption expenses in 2025, and owe taxes, may be eligible to benefit from this credit. 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 not refundable, which means taxpayers can only use the credit if they have federal income tax liability.

The credit and the exclusion apply to international, domestic, private adoption, or public foster care adoptions. Beginning in tax year 2025, a portion of the Adoption Credit is refundable up to $5,000. The non-refundable portion of the credit can be carried forward for a maximum of 5 years; however, it cannot result in a refund. Any remaining non-refundable portion after 5 years is forfeited.

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

Who Qualifies

You may be eligible if you meet these criteria:

  • Your modified adjusted gross income (MAGI) is $259,190 or less. The credit is reduced for incomes between $259,191–$299,189 and unavailable above $299,190.

  • Married couples must generally file jointly to claim the credit.

  • Registered domestic partners may qualify in states allowing second-parent adoption.

  • The child must be a “qualified child”, defined as:

    • Under age 18, or

    • Physically or mentally incapable of self-care

What Counts as Qualified Adoption Expenses?

Qualified expenses are reasonable and necessary costs paid to adopt a child, including:

  • Adoption fees

  • Attorney fees

  • Court costs

  • Travel (including meals and lodging) while away from home

  • Home study fees or other expenses directly related to the adoption

Expenses that do NOT qualify:

  • Adopting your spouse’s child

  • Surrogate parent arrangements

  • Expenses reimbursed by your employer or another federal/state program

Employer-provided benefits:
If your employer reimburses qualified adoption expenses, these may be excluded from your income (up to $17,280 in 2025). Subtract these benefits before calculating your tax credit.

Special Needs Adoptions

Children may be considered “special needs” if:

  • They are U.S. citizens, and

  • A state or Indian tribal government has determined the child:

    • Cannot or should not return to their parents’ home, and

    • Is unlikely to be adopted without assistance

Documentation can include:

  • Adoption assistance or subsidy agreements

  • Certification letters from the state, county, or tribal welfare agency

  • Official letters confirming the child’s special needs determination

Families adopting a child with special needs may be able to claim the full credit or income exclusion, even if no expenses were paid.

When to Claim the Credit

  • Domestic adoptions: Claim expenses as you incur them or when the adoption is finalized.

  • Foreign adoptions: Claim expenses once the adoption is final.

  • Special needs adoptions: Claim when the adoption is finalized.

How Much Can You Claim?

  • The credit applies per child, not per year.

  • If you claimed a portion of expenses in previous years, subtract that amount from your remaining credit.

  • Income exclusions from employer-provided benefits must be applied before claiming the credit.

Example:

  • 2025 adoption expenses: $10,000

  • Employer reimbursed: $4,000

  • Maximum credit you can claim: $6,000 ($10,000 – $4,000)

How to Claim the Credit

  1. Complete Form 8839, Qualified Adoption Expenses.

  2. Attach Form 8839 to your federal tax return.

  3. Report information about the eligible child (SSN, ATIN, or ITIN). Use Form W-7A for an ATIN if needed.

  4. Keep all adoption documentation for your records.

Next Steps

If you’re unsure about eligibility or qualifying expenses:

  • Consult a tax professional.

  • Review the IRS Interactive Tax Assistant and Form 8839 Instructions.

This is a lot of information, and you probably have more questions about the tax credit for adopting a child in your specific situation. Wyoming Children’s Society is here to support you throughout your adoption journey. While we cannot give tax advice, we encourage families to explore the Adoption Tax Credit to help make adoption more affordable.

Wyoming Children’s Society does not offer tax advice and recommends that you talk to your tax professional for specific information on how the Adoption Tax Credit can benefit your family.

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