Federal tax credit
There is help available. The adoption tax credit is adjusted each year based upon the cost-of-living allowance. The maximum credit for 2025 is $17,280. The adoption tax credit is fully available in the amount of $17,280 if your modified adjusted gross income is equal or less than $259,190. If your modified adjusted gross income is more than $259,190 but less than $299,190, you will receive a reduced tax credit. No tax credit is available for those earning more than $299,190. Documentation is important. The form you submit to claim the credit is 8839. The IRS website has additional helpful information: www.irs.gov, including what you will need to document the amount available for your credit. Generally, if you adopt a special needs child, you are eligible for the full amount of the credit, regardless of the costs you incurred. If your adoption does not qualify as special needs, you must keep receipts of your expenditures, which you can claim up to the full credit amount.
Adoption loans and grants
Adoption loans can be obtained from Americas Christian Credit Union or Entrust Financial Credit Union, among other financial service providers. Additionally, a number of foundations provide grants with specific eligibility criteria.
Adoption subsidies and financial aid for adopting an older child
If you adopt a special needs child or a child from foster care, the cost is usually less. A monthly adoption subsidy is often available to help pay for everyday expenses and special services such as remedial educational services, physical therapy, and medical care. You may also take the entire amount of the federal tax credit even if you don’t incur those costs.
Adopting an older child
If you adopt a special needs child or a child from foster care, the cost is usually less. A monthly adoption subsidy is often available to help pay for everyday expenses and special services such as remedial educational services, physical therapy, and medical care. You may also take the entire amount of the federal tax credit even if you don’t incur those costs.
Corporate matching gifts
Further, many large employers offer adoption assistance. See http://benefits.adoption.com/ for a list of employers. Those payments may qualify for exclusion from your income for tax purposes in addition to the federal tax credit. You may exclude up to $17,280 from your income in 2025. So, for example, if your employer offers adoption assistance payments of $5,000 and your total adoption related expenses were $222,280 you could claim $17,280 as a tax credit AND exclude $5,000 from your income. However, if your total expenses were $17,280$17,280, you could not take the credit and the exclusion—the same expenses cannot be counted twice. The income limits for the tax credit also apply to the exclusion.
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