Guides
The Adoption Tax Credit: 2026 Amount and Rules
The adoption tax credit is a federal tax break under Internal Revenue Code Section 23 that offsets the cost of adopting an eligible child. For adoptions finalized in 2026, the maximum credit is $17,670 per child, and for the first time, up to $5,120 of that amount is refundable. Families with modified adjusted gross income (MAGI) below $265,080 in 2026 can claim the full amount, with a phaseout ending at $305,080.
How much is the adoption tax credit in 2026?
The 2026 adoption tax credit tops out at $17,670 per eligible child. Of that, up to $5,120 is refundable (paid to you even if you owe no tax), and the remainder is nonrefundable (it can only reduce tax you owe). The amount is indexed for inflation, so it rises most years.
The credit is claimed per child, not per adoption or per return. A family finalizing two adoptions in 2026 may claim up to $17,670 for each child, subject to their qualified expenses and income limits.
The figure adjusts annually. For adoptions finalized in 2025, the maximum was $17,280 per child, with up to $5,000 refundable. The table below compares the two years.
| Item | 2025 | 2026 |
|---|---|---|
| Maximum credit per child | $17,280 | $17,670 |
| Refundable portion (max) | $5,000 | $5,120 |
| Nonrefundable portion (balance) | up to $12,280 | up to $12,550 |
| MAGI phaseout begins | $259,190 | $265,080 |
| MAGI phaseout ends (credit gone) | $299,190 | $305,080 |
| Employer benefit exclusion (max) | $17,280 | $17,670 |
The new refundable portion (OBBBA change)
Starting with tax year 2025, part of the adoption credit became refundable for the first time. The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, made up to $5,000 of the credit refundable for tax years beginning after December 31, 2024. That amount is inflation-adjusted, reaching $5,120 for 2026.
A refundable credit can generate a refund even when your tax liability is zero. Before this change, a family with little tax owed often could not use much of the credit in the year of adoption and had to carry it forward. The refundable piece delivers cash to lower- and moderate-income adoptive families sooner.
The refundable and nonrefundable portions interact in a specific order. You claim the refundable amount (up to $5,120 in 2026) first, then apply any remaining credit against your tax liability as a nonrefundable credit. One limit matters: any nonrefundable amount carried forward to a later year cannot later be converted into a refundable amount. The refundable portion is available only in the first year the credit is figured for that child.
MAGI phaseout: who qualifies for the full credit
Eligibility depends on modified adjusted gross income. For 2026, families with MAGI below $265,080 qualify for the full credit. The credit phases out ratably between $265,080 and $305,080, and disappears entirely at MAGI of $305,080 or more. The thresholds are the same for single and married-filing-jointly filers.
MAGI here starts with adjusted gross income (see our guide to adjusted gross income) and adds back certain foreign-earned-income and housing exclusions. Most domestic taxpayers use their AGI directly.
The phaseout is proportional. If your MAGI sits halfway through the $40,000 phaseout range, you lose roughly half the credit. Married taxpayers generally must file jointly to claim the credit, though special rules can apply to those who are legally separated or living apart.
Qualified adoption expenses
Qualified adoption expenses are the reasonable and necessary costs directly related to the legal adoption of an eligible child. They form the basis for the credit unless the special-needs rule applies. Expenses paid in connection with adopting your spouse’s child, or through a surrogate arrangement, do not qualify.
Common qualifying costs include:
- Adoption agency fees
- Attorney fees and court costs
- Travel expenses while away from home, including meals and lodging
- Re-adoption expenses for a foreign child
- Other expenses directly related to the legal adoption
Costs that do not qualify include expenses reimbursed by an employer or government program, expenses that violate state or federal law, and fees for adopting a stepchild. You cannot claim the credit and also exclude the same expenses through an employer program; each dollar counts once.
Timing of the credit depends on whether the adoption is domestic or foreign. For a domestic adoption, expenses paid before the year the adoption is final are claimed in the year after payment; expenses paid in or after the final year are claimed in the year paid. For a foreign adoption, no expenses may be claimed until the adoption is final.
The special-needs rule
If you adopt a child the state has determined to have special needs, you may claim the full credit even if your qualified expenses were lower or zero. For 2026, that means up to $17,670 regardless of what you actually spent. This is the single largest planning point in the credit.
A “child with special needs” is a specific legal category, not a medical description. The child must be a U.S. citizen or resident whom a state has determined cannot or should not be returned to the birth parents and who would not likely be adopted without assistance, usually documented in an adoption assistance agreement. Foreign adoptions do not qualify for the special-needs deemed-expense rule.
Note that OBBBA did not change the special-needs mechanics, only the broader refundability of the credit. A special-needs adoption still lets you claim the maximum without receipts, and the refundable portion applies on top of that framework.
Employer-provided adoption benefits
If your employer offers a written qualified adoption assistance program, you may exclude up to $17,670 of those benefits from taxable income in 2026. The exclusion and the credit are separate tax breaks, but they share the same expense pool, so you cannot use both on the same dollar of expense.
Excluded benefits appear on your Form W-2, and you figure the exclusion in Part III of Form 8839. The exclusion is subject to the same MAGI phaseout as the credit. Many families use both: they exclude employer benefits from income and claim the credit for additional out-of-pocket expenses above what the employer covered, up to the per-child maximum.
How to claim: Form 8839
You claim the adoption credit and any employer-benefit exclusion on IRS Form 8839, Qualified Adoption Expenses, filed with your Form 1040. Part II figures the credit, Part III figures the employer exclusion, and the result flows to Schedule 3 and your main return.
The process:
- Confirm the child is an eligible child (under 18 or physically or mentally unable to care for themselves).
- Gather documentation: adoption decree, agency and legal invoices, travel records, and any state special-needs determination.
- Complete Form 8839, entering each child’s information and your qualified expenses (or the maximum, if special needs).
- Apply the MAGI phaseout if your income exceeds $265,080 for 2026.
- Carry the credit to Schedule 3 of Form 1040 and attach Form 8839 to your return.
Keep records for the full carryforward window. Any nonrefundable credit you cannot use in the current year carries forward up to five years, or until fully used, whichever comes first. The credit is broader than most family tax breaks; for a wider view of what is available, see our federal tax credits database.
Frequently asked questions
Is the adoption tax credit refundable in 2026?
Partly. For 2026, up to $5,120 of the adoption tax credit is refundable, meaning you can receive it as a refund even with no tax liability. This is new as of tax year 2025 under OBBBA. Any credit above the refundable cap, up to the $17,670 maximum, is nonrefundable and can carry forward for up to five years.
What is the maximum adoption tax credit for 2026?
The maximum is $17,670 per eligible child for adoptions finalized in 2026, up from $17,280 in 2025. This total combines the refundable portion (up to $5,120) and the nonrefundable portion (up to about $12,550). The amount is per child, so families adopting more than one child may claim it for each, subject to their income and expenses.
Do I have to spend money to get the adoption credit?
Usually yes, but not always. For most adoptions, the credit equals your qualified adoption expenses up to the maximum. The exception is a child the state has determined to have special needs: you may claim the full $17,670 for 2026 even if your qualified expenses were less or zero, provided the child meets the special-needs definition.
At what income does the adoption credit phase out?
For 2026, the credit begins to phase out once modified adjusted gross income exceeds $265,080 and is fully eliminated at $305,080. The reduction is proportional across that $40,000 range. The same thresholds apply to single and joint filers, and they are indexed for inflation each year.
Can I claim both the credit and my employer’s adoption benefits?
Yes, but not for the same expenses. You can exclude up to $17,670 of employer-provided adoption benefits from income in 2026 and separately claim the credit for additional out-of-pocket expenses above what the employer paid. Each dollar of expense counts only once, and both breaks share the same MAGI phaseout.
What form do I use to claim the adoption tax credit?
IRS Form 8839, Qualified Adoption Expenses, filed with Form 1040. Part II figures the credit and Part III figures any employer-benefit exclusion. The credit then flows to Schedule 3. Keep your adoption decree, expense receipts, and any state special-needs determination in case the IRS asks for documentation.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.