Major Changes to the Adoption Tax Credit
The Adoption Tax Credit is a federal tax benefit designed to help adoptive families offset the often high costs of adoption (including domestic, international, and foster care adoptions). The tax rules that govern how the credit is claimed and the amount of the credit are determined by the year the adoption became final. Traditionally non-refundable, the credit reduces federal tax owed, dollar-for-dollar, based on qualified adoption expenses. But for adoptions finalized in 2025 and later the credit becomes partially refundable so it will benefit families even when they have little to no tax liability.
