The Adoption Credit can help offset the high costs of adoption—legal fees, home studies, travel expenses, and more. For 2025, the max credit is $, per child. Adopting through foster care can qualify too.
One thing to watch: This is a nonrefundable credit, which means it will only reduce your tax bill to the extent of your liability. For example, say someone qualifies for the full $17,280, but their tax liability is only $5,280. They will use $5,280 of the credit to reduce their 2025 taxes to $0, and then they will carry forward $12,000 to next year (you can carry the unused portion forward for up to 5 years).
Tips to make the most of it:
• If you end up carrying forward a portion of the credit, work with your tax planner to determine if you should reduce taxes being withheld from your paycheck and\or estimated payments for the year.
• Keep receipts for every qualified expense
• If adopting a child with special needs through foster care, you may qualify for the full credit—even if your out-of-pocket expenses were minimal
• Use Form 8839 when you file
One thing to watch: This is a nonrefundable credit, which means it will only reduce your tax bill to the extent of your liability. For example, say someone qualifies for the full $17,280, but their tax liability is only $5,280. They will use $5,280 of the credit to reduce their 2025 taxes to $0, and then they will carry forward $12,000 to next year (you can carry the unused portion forward for up to 5 years).
Tips to make the most of it:
• If you end up carrying forward a portion of the credit, work with your tax planner to determine if you should reduce taxes being withheld from your paycheck and\or estimated payments for the year.
• Keep receipts for every qualified expense
• If adopting a child with special needs through foster care, you may qualify for the full credit—even if your out-of-pocket expenses were minimal
• Use Form 8839 when you file