Adoptive families filing federal tax returns in 2026 have a big reason to pay closer attention to Form 8839: for the first time in the credit’s history, a portion of the Adoption Tax Credit is refundable. That means eligible families can get money back even if they owe little or no federal income tax. Below are the key facts on how much the credit is worth, who qualifies, the income phase-out, and how to actually claim it.
1. What Is the Adoption Tax Credit
The Adoption Tax Credit is a federal tax credit designed to offset the cost of adopting a child. It covers a range of “qualified adoption expenses,” including:
- Adoption fees charged by agencies
- Court costs and attorney fees
- Traveling expenses (including meals and lodging while away from home)
- Other expenses directly related to, and for the principal purpose of, the legal adoption of an eligible child
The credit applies broadly across adoption types — domestic adoptions, international adoptions, and adoptions of children with special needs — though the rules differ slightly depending on the category, especially for special-needs adoptions (more on that below).
2. What Changed Under the OBBBA
The One Big Beautiful Bill Act (OBBBA) made a structural change to the Adoption Tax Credit that adoptive families have wanted for years: part of the credit is now refundable. Previously, the Adoption Tax Credit was entirely nonrefundable, meaning it could only reduce a filer’s tax liability to zero — any unused amount could be carried forward for up to five years, but families with little tax liability often couldn’t use the full credit at all.
Under the OBBBA:
- Up to $5,000 of the credit per qualifying child is now refundable, according to the IRS.
- The change applies to tax years beginning after 2024 — in practical terms, this means it first applies to 2025 tax returns, which most families file during the 2026 filing season.
- Any remaining nonrefundable portion of the credit above the refundable amount still carries forward for up to five years, as under prior law.
This is a meaningful shift: lower-income adoptive families who previously couldn’t benefit from the full credit because they didn’t owe enough tax can now receive at least part of it as a refund.
3. 2026 Credit Amount and Income Phase-Out
The maximum credit, the refundable portion, and the income thresholds are all adjusted for inflation each year. The 2025 figures come from the IRS adoption credit page, and the 2026 figures come from Section 4.04 of Revenue Procedure 2025-32.
| Tax year | Maximum credit per child | Refundable portion per child | Phase-out starts above (MAGI) | Credit gone at (MAGI) |
|---|---|---|---|---|
| 2025 (filed in 2026) | $17,280 | $5,000 | $259,190 | $299,190 |
| 2026 (filed in 2027) | $17,670 | $5,120 | $265,080 | $305,080 |
The phase-out applies to modified adjusted gross income (MAGI). Between the two thresholds the credit shrinks on a sliding scale, and at or above the upper figure it’s eliminated. The credit is per child over your lifetime, not per year, so if you claimed part of it in an earlier year, subtract that from the maximum.
Two Quick Examples
The phase-out. Say you adopt one child, have the full $17,280 in qualified expenses for 2025, and your MAGI is $279,190. That is $20,000 above the $259,190 starting point, and the phase-out band is $40,000 wide. $20,000 divided by $40,000 is 0.5, so the credit is cut in half to about $8,640. A MAGI of $259,190 or less would keep the full amount.
The refundable split. Say instead your income is under the limit and you paid $20,000 in qualified expenses for a 2025 adoption, but you only owe $2,000 in federal income tax. The credit caps at $17,280, and in this simplified picture it breaks down like this:
- $5,000 is refundable, so it comes back to you as cash
- $2,000 of the remaining $12,280 wipes out your tax bill
- The other $10,280 carries forward for up to five years, but it can’t become a refund
Under the old rules, that family would have received none of the first $5,000 as a refund. These numbers are an illustration, so let Form 8839 do the actual math for your return.
4. Special Needs Adoptions
Adoptions of children determined to have special needs get more favorable treatment under the credit. If a state (or, under a parity provision added by the OBBBA, a tribal government) determines that a child has special needs, adoptive parents may be able to claim the full maximum credit amount for that year — even if their actual documented qualified adoption expenses were lower than the maximum, or even zero.
Key points on special-needs eligibility:
- The child must be a U.S. citizen or resident at the time the adoption process began.
- A state or tribal government must have determined the child cannot or should not be returned to their parents’ home, and that the child likely won’t be adopted without assistance.
- The OBBBA extended the same recognition to Indian tribal government determinations of special needs that previously applied primarily to state determinations, closing a gap that had left some Native families without equal access to this provision.
5. How to Claim the Credit
To claim the Adoption Tax Credit, you’ll need to complete and attach Form 8839, Qualified Adoption Expenses, to your federal Form 1040. On the form, you’ll report:
- Information identifying the eligible child (or children)
- Whether the child has special needs or is a child with a disability
- Your total qualified adoption expenses for the year
- Any employer-provided adoption assistance you received (which is calculated on the same form, since it reduces the amount of expenses eligible for the credit)
Timing matters too. For a domestic adoption, you can claim expenses in the year you incur or pay them if the adoption is final that year, and in the following year if it isn’t final yet. For a foreign adoption, you generally claim once the adoption is final, and then you can claim all eligible expenses paid, including those from earlier years.
Good recordkeeping matters here. Because the credit is based on qualified adoption expenses, keep receipts, invoices, and statements from adoption agencies, attorneys, and courts, along with documentation of any state or tribal special-needs determination. If you’re later asked to substantiate the credit, these records are what you’ll need.
6. FAQ
Can I claim the credit for a failed adoption attempt?
Expenses related to an unsuccessful attempt to adopt a U.S. child can generally still qualify, and in some cases can be combined with expenses from a later, successful adoption. The rules differ for failed attempts to adopt a foreign child, where expenses generally aren’t creditable unless the adoption is finalized. Because this area has nuance, it’s worth reviewing the specific rules on the IRS adoption credit page or checking with a tax professional for your situation.
Does the refundable portion affect other benefits?
Refundable credits generally increase your refund amount rather than being counted as new “income,” but every household’s tax situation is different, especially if you receive other income-tested benefits. If you’re unsure how a larger refund might interact with other programs you rely on, it’s worth checking with a tax professional.
Can employer adoption assistance be combined with the credit?
Yes, but not on the same dollar of expenses. If your employer provides adoption assistance under a qualified program, that assistance may be excludable from your income up to a separate annual limit, but you can’t claim the Adoption Tax Credit for the same expenses that were already covered by excludable employer assistance. Form 8839 walks through this coordination step by step.
Bottom Line
The 2026 filing season brings a genuinely useful change for adoptive families: part of the Adoption Tax Credit — up to $5,000 per child for 2025 returns, rising to $5,120 for 2026 — is refundable for the first time. Combine that with the special-needs provisions and the newly extended tribal government parity, and more adoptive families than ever may be able to put this credit to use. As always, confirm the amounts for your tax year on the IRS adoption credit page before you file, since inflation adjustments happen every year.
Related: Raising a Grandchild? You May Qualify for Tax Credits Without a Court Order | $2,200 Per Child: How the Now-Permanent Child Tax Credit Works Under the OBBBA