Adopting a Child? You May Qualify for a Bigger Tax Credit in 2026

If you’re adopting a child—or planning to adopt—there’s some good news to know about the adoption tax credit. For 2026, the credit has been increased, and part of the credit is now refundable, which could make a significant difference for eligible adopting parents.

How Much Is the Adoption Tax Credit in 2026?

For 2026, eligible taxpayers can claim a credit for up to $17,670 of qualified adoption expenses per eligible child.

Qualified expenses can include costs such as:

• Adoption fees

• Court costs

• Legal expenses

• Travel expenses

• Meals

• Other expenses directly related to a legal adoption

There is also a special rule for special needs adoptions. The full credit may be available even when the actual adoption expenses are less than the maximum credit amount.

Who Qualifies?

The credit begins to phase out for taxpayers with modified adjusted gross income (MAGI) above $265,080 and is completely phased out once MAGI reaches $305,080.

This means higher-income taxpayers may receive a reduced credit or may not qualify for the credit at all.

Part of the Credit Is Now Refundable

One of the biggest changes for 2026 is that up to $5,120 of the adoption tax credit is refundable. That means eligible taxpayers can potentially receive up to $5,120 as a refund even if they don't have enough federal income tax liability to use the entire credit.

This refundable portion was included as part of the One Big Beautiful Bill and will be adjusted for inflation in future years. For comparison, the refundable amount for 2025 returns is $5,000 per qualifying child.

What Happens If You Can't Use the Entire Credit?

If you can't use the entire adoption tax credit in the year you claim it, the unused portion generally can be carried forward for up to five years. There has also been some recent confusion over whether a portion of a carryforward credit could be refundable. The IRS initially took the position that a carryforward credit could not be refunded and updated the 2025 Form 8839 and its instructions accordingly. The IRS later changed its position.

What About 2025 Returns?

IRS Commissioner Frank Bisignano testified before Congress in April that certain 2025 adoption credit carryforwards related to pre-2025 adoption expenses can be refundable, up to $5,000 per qualifying child. The IRS has indicated that it is working on a process for taxpayers who already filed their 2025 returns and may be affected by this change.

The agency is expected to provide additional information explaining what taxpayers need to do to correct or update their returns.

The Bottom Line

If you adopted a child in 2025 or 2026, or you're currently in the adoption process, it's important to keep track of your qualified adoption expenses and understand how the credit applies to your situation. With the increased credit amount and the new refundable portion, the adoption tax credit could provide meaningful tax savings for eligible families.

Because the rules surrounding adoption credits, carryforwards, and refunds can be complicated, consider working with a tax professional to make sure you're claiming the credit correctly and taking advantage of any benefits you're entitled to.