Short Answer
The adoption tax credit under IRC §23 is a federal credit for the qualified expenses of adopting an eligible child, worth up to $17,670 per child for 2026 ($17,280 for 2025). For a child a state or Indian tribal government determines has special needs, you may claim the full maximum even with no expenses. The credit phases out when modified adjusted gross income exceeds $265,080 (2026) and disappears at $305,080, with the same thresholds for every filing status. Beginning in 2025, up to $5,120 of the 2026 credit ($5,000 for 2025) is refundable per child and paid even if you owe no tax; the rest is nonrefundable, limited to your income tax, and carries forward for up to five years. You claim it on Form 8839, and married couples generally must file jointly.
2026 and 2025 Adoption Credit Amounts
Adoption Credit and Assistance Figures — IRC §23 and §137
| Figure | Tax Year 2026 | Tax Year 2025 |
|---|
| Maximum credit per child | $17,670 | $17,280 |
| Refundable portion per child | $5,120 | $5,000 |
| MAGI phase-out begins | $265,080 | $259,190 |
| MAGI phase-out complete | $305,080 | $299,190 |
| Employer §137 exclusion limit | $17,670 | $17,280 |
| Nonrefundable carryforward | Up to 5 years | Up to 5 years |
The phase-out range is a fixed $40,000 wide in both years and applies identically to single, head of household, married filing jointly, and qualifying surviving spouse filers. Within the range the credit is reduced ratably by the fraction of MAGI over the lower threshold to $40,000. Source: Rev. Proc. 2025-32 (2026) and Rev. Proc. 2024-40 (2025), with the refundable portion added by the One Big Beautiful Bill Act, P.L. 119-21 §70402.
How the Adoption Credit Calculation Works
This tool follows the order of IRS Form 8839. For the full rules - qualified expenses, special needs, the refundable portion, the employer exclusion, and claim-year timing - see the Adoption Tax Credit Guide.
Step 1: Determine the Credit Base Confirmed
For a regular adoption, the base is your qualified adoption expenses (less any employer-excluded amounts) up to the per-child maximum, multiplied by the number of eligible children. For a special-needs adoption, the base is the full per-child maximum regardless of expenses, in the year the adoption is final. The 2026 maximum is $17,670 per child; for 2025 it is $17,280.
Step 2: Apply the MAGI Phase-Out Confirmed
Under §23(b)(2), if your modified adjusted gross income exceeds the year's lower threshold ($265,080 for 2026), the credit is reduced by the fraction equal to the excess over $40,000. At or above the upper threshold ($305,080 for 2026) the credit is fully phased out. The thresholds are identical for every filing status; there is no joint-filer doubling.
Step 3: Split Into Refundable and Nonrefundable Confirmed
Beginning with 2025, up to $5,120 per child for 2026 ($5,000 for 2025) of the allowed credit is refundable under the One Big Beautiful Bill Act and is paid even if you owe no income tax. The portion above that cap is nonrefundable.
Step 4: Apply the Tax-Liability Limit and Carryforward Confirmed
The nonrefundable portion can only offset your federal income tax for the year. If you enter a tax-liability figure, the calculator caps the nonrefundable amount at it and shows the rest as a carryforward; leaving it at 0 shows the full nonrefundable amount before the cap. Under §23(c), an unused nonrefundable amount carries forward for up to five years, and a carried-forward amount stays nonrefundable.
Step 5: Report on Form 8839 Confirmed
The refundable portion flows to Schedule 3 of Form 1040 as a refundable credit, and the nonrefundable portion flows to Schedule 3 line 6c and is limited by the Credit Limit Worksheet. The employer-assistance exclusion is figured separately in Part III of Form 8839.
Frequently Asked Questions
What is the adoption tax credit and how much is it for 2026?
The adoption tax credit under IRC §23 is a federal credit for qualified expenses of adopting an eligible child. For 2026 the maximum is $17,670 per child (up from $17,280 for 2025). The credit equals your qualified adoption expenses up to that per-child cap, and for a child the state or an Indian tribal government has determined to have special needs you may claim the full maximum even if you paid no qualified expenses. Beginning with 2025, up to $5,120 of the 2026 credit ($5,000 for 2025) is refundable, and the rest is nonrefundable with a five-year carryforward. You claim it on Form 8839.
Is the adoption tax credit refundable?
Partly, beginning with tax year 2025. The One Big Beautiful Bill Act made up to $5,000 of the adoption credit refundable per qualifying child for 2025, indexed for inflation to $5,120 for 2026. The refundable portion is paid even if you owe no federal income tax. Any credit above the refundable cap is nonrefundable: it can only offset your income tax in the current year, and the unused amount carries forward for up to five years. A nonrefundable amount carried forward from a prior year cannot later be converted into a refundable amount.
What are the income limits for the adoption credit in 2026 and 2025?
The adoption credit phases out based on modified adjusted gross income (MAGI), and the same thresholds apply to every filing status. For 2026 the credit begins to phase out when MAGI exceeds $265,080 and is fully eliminated at $305,080 or more. For 2025 the phase-out runs from $259,190 to $299,190. Within that $40,000 range the credit is reduced ratably: the reduction equals the credit times the amount your MAGI exceeds the lower threshold divided by $40,000. MAGI for this purpose is your AGI increased by the foreign earned income and Puerto Rico and possessions exclusions.
What adoption expenses qualify for the credit?
Qualified adoption expenses are the reasonable and necessary costs directly related to the legal adoption of an eligible child, including adoption fees, court costs, attorney fees, and travel expenses such as meals and lodging while away from home. They do not include expenses for adopting your spouse's child, surrogate parenting arrangements, expenses that violate state or federal law, or expenses reimbursed by an employer or a government program. An eligible child is one under age 18, or any age if physically or mentally incapable of self-care.
How does the credit work for a special needs adoption?
If a state (or, beginning in 2025, an Indian tribal government) determines that a child has special needs, you may claim the full maximum adoption credit for the year the adoption is final even if you paid little or no qualified adoption expenses. For 2026 that deemed amount is $17,670 per child; for 2025 it is $17,280. Special needs in this tax sense means a U.S. child a state has determined cannot or should not be returned to the birth parents and who will not be adopted without assistance; it is not the same as a child's medical or disability status.
What is the employer-provided adoption assistance exclusion?
Under IRC §137, you can exclude from income amounts your employer pays under a written adoption assistance program, up to the same per-child limit as the credit ($17,670 for 2026, $17,280 for 2025) and subject to the same MAGI phase-out. You can use both the exclusion and the credit, but not for the same dollars of expense. The exclusion reduces the qualified expenses available for the credit, so this calculator lets you subtract employer-excluded amounts before computing the credit. The exclusion itself is figured in Part III of Form 8839.
Can I carry forward the adoption credit?
Yes, the nonrefundable portion carries forward. After the refundable portion (up to $5,120 for 2026) is paid, any remaining credit is nonrefundable and limited to your federal income tax for the year. Whatever the tax cannot absorb carries forward for up to five years or until used, whichever comes first. The refundable portion does not carry forward because it is paid in full in the current year, and a carried-forward nonrefundable amount stays nonrefundable in later years.
When can I claim the adoption credit?
Timing depends on whether the child is a U.S. child or foreign and whether the adoption is final. For a domestic adoption, expenses paid before the year the adoption becomes final are claimed in the tax year after they are paid; expenses paid in the year of finality are claimed that year; and expenses paid after finality are claimed in the year paid. For a foreign adoption, no expenses are claimed until the adoption is final, then all qualified expenses are claimed in the year of finality (or later if paid later). Special-needs credits are claimed in the year of finality.
Can married filing separately claim the adoption credit?
Generally no. A married taxpayer must file a joint return to claim the adoption credit or the employer-assistance exclusion. A narrow exception applies if you are legally separated under a decree, or you lived apart from your spouse during the last six months of the year and the child lived with you for more than half the year and you paid more than half the cost of keeping up your home. Outside that exception, married filing separately cannot claim the credit.
What to Do Next
If Your Income Is Below the Phase-Out
You qualify for the full credit on your qualified expenses up to the per-child maximum. File Form 8839 and claim the refundable portion first, then the nonrefundable balance against your tax, carrying any excess forward. Pair this with the Child Tax Credit Calculator if you also have qualifying children.
If You Are Near the Phase-Out Threshold
Because the phase-out runs over a fixed $40,000 of MAGI, lowering MAGI (for example, with a pre-tax retirement contribution) can restore part of the credit. Estimate the effect with the AGI & MAGI Calculator and read how MAGI is built in the MAGI Guide.
If You Adopted a Special-Needs Child
Confirm you have the state or tribal special-needs determination, then claim the full maximum credit for the year of finality even if your out-of-pocket cost was low. This is the highest-value result in the credit, and the refundable portion still applies.
If Your Employer Helped Pay
Exclude the employer adoption-assistance amount from income under §137 and claim the credit only on the expenses you paid yourself. Read the full coordination rules in the Adoption Tax Credit Guide before filing.