Adoption Tax Credit for 2026: $17,670 Per Child — With $5,120 Refundable in Year One

The adoption tax credit helps families with the cost of adoption. For 2026, the maximum federal credit is $17,670 per child. As in prior years, special needs (foster care) adoptions automatically get the full amount.

Big change for 2026: the credit is now partly refundable. That means up to $5,120 can be paid to you even if you owe no federal income tax. In simple terms, families with little or no tax due can still receive more than $5,000 in year one.

How the 2026 Federal Adoption Credit Works

Maximum amount: $17,670 per child. You can claim what you spent on qualified adoption expenses, up to the cap. For a child with special needs, you are allowed the full $17,670 without proving expenses.

Refundable part: Up to $5,120 is refundable in 2026, even if you did not pay that much in federal tax. The rest of the credit is “nonrefundable,” which means it first reduces any tax you owe.

Income phase‑out: The credit starts to phase out if your modified adjusted gross income is above $265,080 and is fully phased out at $305,080.

Illinois Adoption Income Tax Credit (Don’t Miss This)

Illinois residents may also claim an Illinois adoption tax credit. The amount is up to $5,000 (for married joint filers) per Illinois child age 1 or older at the time of adoption, or up to $2,000 per child when the child is not an Illinois resident. Just like the federal credit, special needs (foster care) adoptions automatically receive the full amount. See the law here: 35 ILCS 5/227.

Carry‑Forward, Filing & Records

The amount of credit you do not use in the first year can carry forward for up to five years for both the federal and Illinois credits. To claim the federal credit, file IRS Form 8839 with your return.

Keep your records. Save proof of qualified adoption expenses, placement paperwork, and your final adoption decree. Because part of the credit is now refundable, strong documentation is wise. When the credit was refundable in the past (around 2012), many returns claiming it were audited. Good records help your claim go smoothly.

What Expenses Count? What Does Not?

Qualified expenses may include agency fees, home studies, court costs, travel, and other adoption‑related costs. The tax credit is not available for adopting your spouse’s child, surrogate expenses, or expenses reimbursed by employer programs for adoption. It has been reported that about half of U.S. companies today offer adoption benefits — see this overview: Chicago Tribune: Adoption benefits.

Quick Example

You adopt a child in 2026 and spend $12,000. You may claim up to $12,000 (not over $17,670). If you owe no federal income tax, you could still receive up to $5,120 as a refund. Any remaining unused amount can carry forward for up to five years. If your child is a special needs adoption from foster care, you may claim the full $17,670 regardless of your out‑of‑pocket expenses.

Questions about adoption in Illinois? Visit our Adoption page or contact us. You can also schedule online.

Adoption Tax Credit for 2024

Adoption Tax Credit 2026: $17,670 + $5,120 Refundable