The Adoption Tax Credit Refundability Act is a bipartisan proposal aimed at expanding the benefits of the adoption tax credit to more families. This initiative seeks to make the credit refundable, allowing families to claim the full amount even if it exceeds their “tax burden.”
A Complex Issue
The current tax law allows families to claim the adoption tax credit for qualified expenses up to $16,810. However, a family cannot receive the entire amount if they are paying more than this in federal taxes. This creates a complex situation where families with lower incomes may not be able to claim the full benefit of the credit, despite the significant costs associated with adoption.
- Current law allows qualified expenses up to $16,810
- Eligible families cannot claim the full amount if they pay more than $16,810 in federal taxes
Benefits of Refundability
Making the adoption tax credit refundable would have several benefits for families. Firstly, it would allow more families to claim the full amount of the credit, even if it exceeds their tax burden. This could be particularly beneficial for families with lower incomes, who may struggle to claim the full benefit due to the current cap on qualified expenses.
- More families could claim the full amount of the credit
- Beneficial for families with lower incomes
Lawmakers Weigh In
Several lawmakers have expressed support for the Adoption Tax Credit Refundability Act. Sen. Mark Kelly (D-Ariz.) stated, “Adoption creates the opportunity to make families whole, but the costs can put it out of reach for too many Arizonans. Making this tax credit refundable means more families can afford to adopt and give a child a safe, loving home.”
“Adoption is a true joy for families, but it is not without significant financial cost. Our bill will make the credit refundable to help all adoptive families access the full amount of the adoption tax credit, regardless of their tax burden. Support for adoptive families is essential to ensure more children find the stable, loving home they deserve,” Sen. Kevin Cramer (R-N.D.) added.
Eligibility and Exclusions
The adoption tax credit is available for qualified expenses, including fees for the adoption itself, legal costs, and travel costs. However, people who have adopted their spouse’s child or used a surrogate do not qualify for the credit. The credit also works for adoptive children who originated outside the United States.
| Eligible Expenses | Excluded Expenses |
|---|---|
| Adoption fees | Adoption costs for spouse’s child or surrogate |
| Legal costs | Travel costs |
| Other expenses | N/A |
Current State of the Credit
The adoption tax credit was available for families making up to $252,150 in 2024, but those making up to $292,150 received a smaller credit. The credit has been available in previous years, including 2010 and 2011, when it was refundable.
- Eligible Income Range
- Up to $252,150
- Reduced Credit for Higher Income
- Up to $292,150
A Call to Action
The push to make the adoption tax credit refundable is ongoing, with several lawmakers advocating for its passage. As the federal tax filing deadline approaches, conversations on Capitol Hill continue to swirl around the proposal. It remains to be seen whether the Adoption Tax Credit Refundability Act will become a reality, but its potential benefits for families would be significant.