Adopting a child is one of the most beautiful journeys, but it can also bring financial challenges.  That’s why there’s an Adoption Tax Credit—a financial help from Uncle Sam. And now, the credit just got better for families in 2025.

What’s Changing?

Starting with the 2025 tax year—so when you file your taxes in 2026—the Adoption Tax Credit is going to be partially refundable. That means you can get up to $5,000 back as a refund, even if you owe less in taxes. This is a big deal, especially for lower‑income families or families who didn’t owe enough to fully benefit before.

What Was the Credit Before?

Previously, the credit was non‑refundable. It could only reduce your tax bill to zero. If your credit was more than what you owed, you couldn’t get the extra back—it just sat there. You could carry unused amounts forward for up to five years, but that’s it.

Why That Was Limiting

Let’s say you owed $3,000 in federal taxes and you qualified for a $17,280 adoption credit (the 2025 maximum). Under the old rules:

You’d use $3,000 to bring your balance to zero.

The remaining $14,280 wouldn’t be refunded. You’d have to wait to use it in future years.

If your income is not high enough, you might never owe enough taxes to use the full credit.

That’s a tough spot for families doing everything right but still stuck by low wages.

What’s New in 2025?

Thanks to law changes, the credit becomes partially refundable. Here’s a clearer breakdown:

Maximum Credit – The credit is up to $17,280 per adopted child in 2025.

Refundable Portion – Up to $5,000 of that can be refunded—even if you owe zero taxes.

That $5,000 amount will grow with inflation in future years.

Income Phase-Out – The credit starts phasing out once your Modified Adjusted Gross Income (MAGI) is over $259,190.

If you earn more than $299,190, the credit phases out entirely and you can’t claim it.

Why It Matters More Now

For families who couldn’t use much of the credit before because they didn’t owe enough tax, this change means immediate help. NCFA (National Council for Adoption) highlighted in its recent press release that making the credit refundable “would ensure lower‑income families receive the same support” as others and send a strong message that adoption is supported across the board

What Counts as Qualified Adoption Expenses?

To claim the credit, adoptive parents need specific expenses. These include:

• Adoption fees (agency, court, and legal).
• Court and attorney fees.
• Travel expenses (flights, gas, lodging, and meals during adoption trips).
• Other required costs to complete your adoption legally.

However, expenses already reimbursed (like by your employer), payments to a surrogate, or costs for adopting a stepchild don’t count.

Special Needs Adoptions

If a child is designated as “special needs” by a state, you can claim the full $17,280 credit, even if your actual expenses were less. This provision ensures that families of special‑needs children aren’t disadvantaged just because costs were lower

How to Claim the Credit

To claim, here’s what to do:

• Use IRS Form 8839 (“Qualified Adoption Expenses”)—that’s still the form to attach to your taxes.
• Submit details about your adopted child, including SSN or an ATIN (if an SSN isn’t available yet).
• File this with your Form 1040 when submitting taxes.

(Note: Form 8839 instructions and details are available through IRS.gov).

Why Partial Refundability is a Game-Changer

1. Helps Lower- and Middle-Income Families

Previously, families with low tax liability couldn’t benefit fully. With this change, parents who pay little or no tax can still get up to $5,000 back per child—no waiting for future years.

2. Removes Barriers to Adoption

Adoption is already expensive. NCFA President Ryan Hanlon emphasized that making the credit refundable shows a bipartisan commitment and helps families take on adoption without being held back by costs

3. Supports More Adoptions

Over 108,000 children in foster care are waiting for adoption, plus more overseas or waiting through other systems

For families adopting special-needs children—who often bring extra expenses—this change removes yet another financial barrier.

Real-World Examples

Let’s break down how it works:

Scenario A – Lower and Certain Middle Income Families

MAGI: $60,000

Tax owed: $1,500

Qualified expenses: $18,000

Apply credit:

$1,500 lowers the tax to $0

Up to $5,000 refundable—get $3,500 back

Total benefit = $5,000, with a carryover credit of $12,280 ($17,280 – $5,000)

Without refundability, you’d only get $1,500.

Scenario B –Middle and Higher Income Families – No entitlement to refundable amount

MAGI: $185,000

Tax owed: $24,000

Expenses: $18,000

Benefit: Entitled to full credit of $17,280. No refundable amount, but full reduction in tax.

Scenario C – Higher Income Families – No entitlement to refundable amount

MAGI: $280,000 (within phase-out)

Tax owed: $45,000

Expenses: $18,000

Benefit:  Partial credit refund of $8,294. Reduced credit in phase-out. No entitlement to refundable amount

Scenario D – High Income Families

MAGI: $300,000 (just above the credit cap)

No entitlement to refundable amount or to any of the credit.

Additional Tips for Parents

• Keep records: Save receipts, travel logs, court documents.
• Form 8839: Fill out and track SSN or ATIN carefully.
• Mark your calendar: 2025 taxes file in 2026.
• Plan for inflation: The refundable part may increase in future years.
• Ask for help: A tax advisor, adoption counselor, or an adoption attorney can guide you.

What NCFA Says

In their announcement, NCFA applauded Congress for passing the new rule and emphasized this:

“A refundable adoption tax credit would be life‑changing for so many institutionalized children… particularly critical for would‑be foster and kinship families constrained by lower or fixed incomes.”

They stressed that this not only improves financial access but also carries a strong message of support from lawmakers .

Why This Matters Now

• Removes a key barrier: Finances shouldn’t stop someone from adopting.
• Helps those who need it most: Lower-income, certain middle income, and fixed-income families now get immediate help.
• Boosts adoption numbers: More families can now afford the transition.
• Signals national support: Bipartisan backing shows caring from all sides of government.

For Special‑Needs Adoption

Because you don’t need to incur $17,280 in expenses—if states determine the child as having special‑needs—families still get that full amount of the credit. With the refundable portion, that’s a meaningful boost even when expenses are low.

Quick Takeaways

2025 tax year = refundable credit (filed 2026)

$17,280 max credit per child

$5,000 refundable portion, adjusted for inflation each year

Phase-out of the credit begins at $259,190 MAGI, and is gone at $299,190 for 2025

Qualifies: fees, court, legal, and unreimbursed travel

Special‑needs kids? Receive the full credit regardless of the amount of expenses

Form 8839 is your gateway

Your Next Steps if You’re Planning to Adopt in 2025

Track all expenses: get and keep receipts.

Check income: make sure you’re within phase-out range.

Watch for updates: Inflation may raise the refundable cap.

Get help: A tax advisor or adoption support group can help you through IRS Form 8839 and your specific state.

Share the news: Other families should know this better support is coming.

The Adoption Tax Credit was created to help families bring children home. By adding refundability in 2025, Congress has made a bold move toward fairness. This change isn’t just about saving money—it’s about making adoption a more real and hopeful option for families of all income levels.

If you’re adopting a child next year, this credit could mean thousands in financial relief—right when you need it most.

Adoption brings joy, hope, challenges—and costs. With this tax credit update, more families can step forward confidently. If adoption’s on your horizon, start prepping your paperwork and planning your budget now. And when tax time rolls around, you’ll have  valuable tax support ready to help make your family complete.

With over 30 years of experience, the Law Office of Cofsky & Zeidman, LLC has helped more than 2,000 families through adoption. Attorney Donald C. Cofsky and his team guide families through agency, private, stepparent, and international adoptions, as well as contested cases. Their support includes managing adoption expenses, completing home studies, and preparing families for court proceedings.

To learn how Cofsky & Zeidman can help your family, contact their office online or call (856) 429-5005 in Haddonfield, (856) 845-2555 in Woodbury, or (215) 563-2150 in Philadelphia. Legal confidence gives families peace of mind—so they can focus on what matters most: building a loving and lasting home for your child.