2025 Adoption Tax Credit (ATC)

For the calendar year 2025, the federal adoption tax credit is up to $17,280 per child, with up to $5,000 of that amount being partially refundable. This means that qualifying families can receive a refund of up to $5,000, even if they have no tax liability. This is new for the 2025 tax year. 

The credit applies one time for each adopted child after the adoption has been finalized and should be claimed when taxpayers file taxes for the year the adoption was finalized. If you adopt twins or triplets, you are eligible to claim the tax credit for EACH child.  

To be eligible for the credit, applicant parents must meet the following criteria:

• Have adopted a child other than a stepchild — This child must be either under the age of 18 or be physically or mentally unable to take care of him or herself.
• Be within the income limits — Income affects how much of the credit adoptive parents can claim. For the year 2025, families with a modified adjusted gross income below $259,190 can claim the full tax credit, as long as the family has at least $12,280 in federal income liability AND paid more than $17,280 in adoption related fees. Those families with a modified adjusted gross income between $259,190 and $299,190 can claim partial credit, and those with a modified adjusted gross income above $299,190 cannot claim the credit at all.
• Paid that much in adoption expenses — If the family has paid less than $17,280 in adoption expenses, they may only claim up to the amount they spent.  

What is the Adoption Tax Credit? 

According to the IRS, “The adoption tax credit (ATC) offsets qualified adoption expenses, making adoption possible for some families who could not otherwise afford it. Generally, you may qualify for the adoption credit if you adopted a child and paid qualified expenses relating to the adoption. If you attempt to adopt a U.S. child, you are able to claim the credit even if the adoption does not become final.”

Please note, as stated above, that even qualified expenses from “disrupted” adoptions qualify for the credit. The IRS states, “Expenses paid in an unsuccessful attempt to adopt an eligible child before finalizing the adoption of another child can qualify for the credit.” 

Congress made the Adoption Tax Credit (ATC) a permanent part of the tax code when they passed the American Taxpayer Relief Act of 2012.

When Can I Claim the Tax Credit? 

The IRS states that “…for a domestic adoption, if qualifying adoption expenses are paid any year before the adoption becomes final, the proper year for claiming the credit is the year AFTER the year of payment. If the qualifying adoption expenses are paid during the year the adoption becomes final, the credit is claimed for the year of payment.”

For example, if you matched with an expectant mother in 2025, brought the baby home in 2025, and also finalized your adoption in 2025, you may claim the adoption tax credit on your 2025 taxes. If you matched with an expectant mother and brought the baby home in 2025 but will not be finalizing your adoption until 2026, you must wait to claim the ATC on your 2026 taxes. If you had a disrupted adoption in 2025, you must also wait to claim the ATC on your 2026 taxes, the year AFTER the failed adoption.  

What is a Qualified Expense for the Tax Credit? 

Qualified expenses for the Adoption Tax Credit include items such as: attorney fees; adoption agency fees; court costs; travel expenses (including monies spent for travel, meals, and lodging while traveling for your adoption or potential adoption); and other expenses directly related to the legal adoption of the child or to a disrupted adoption. Be sure to keep records of all adoption related expenses and review them with your tax advisor.

Costs that were reimbursed by an employer or were funded under a government program are NOT eligible. Because the credit may be taken for each adoption attempt, costs associated with a disrupted domestic adoption qualify.

What if I Did Not Pay Enough Tax to Claim the Entire Credit? 

If you did not have enough qualifying expenses to qualify for the entire ATC in one year, you may carry any unused credit forward up to FIVE tax years. For 2025, the first $5,000 can be claimed regardless of tax liability. 

What Forms Do I need to Fill Out to Claim the Credit? 

You will need a Tax Pay Identification for your newborn. To file for the Adoption Tax Credit you will need IRS Form 8839, which can be found here: https://www.irs.gov/pub/irs-pdf/f8839.pdf 

Please Consult a Tax Advisor 

Haven Adoptions & Family Services are NOT tax advisors.  We strongly encourage you to speak to a tax professional regarding your adoption and the Adoption Tax Credit. If you do not have a tax advisor or if your tax advisor doesn’t feel comfortable working with the adoption credit, feel free to reach out to connect@havenadoptions.com, and we may be able to recommend someone who can help in your area.