Adoption Tax Credit Refundability Act of 2025

Key Points

• This bill changes the current adoption tax credit to make it "refundable." Currently, if the credit is worth more than the taxes you owe, you simply lose the extra money. This change means the government would send you a check for the remaining balance, putting more money back in the pockets of adoptive parents.
• The policy aims to make adoption more affordable for middle- and lower-income families. Because these families often owe less in federal income tax, they currently cannot use the full value of the credit. Making it refundable ensures that a family's income level doesn't prevent them from receiving the full financial benefit.
• If passed, the new rules would start for the 2026 tax year. Additionally, any unused adoption credits that families are "carrying forward" from previous years would automatically become refundable. This allows families who have been waiting years to use their credits to finally receive that money as a refund.
• To simplify the process, the bill requires the government to create a standard form for verifying adoptions. This "third-party affidavit" would provide a consistent way for families to prove they qualify for the credit, which is especially helpful for those adopting children with special needs.

Impact Analysis

Govbase has not yet run an impact analysis on this legislation.