Adopting a child is expensive. Fortunately, there may be tax breaks to help adoptive parents offset some of the costs. In 2024, a credit of up to $16,810 is available for qualified expenses, with phaseouts for higher-income parents. In 2025, the credit will rise to $17,280. The credit is nonrefundable, which means it’s limited to your tax liability. However, you generally can carry forward the unused amount for up to five years. Qualified expenses include adoption fees, legal costs and travel expenses. Some employers also provide financial adoption assistance and employees may be able to exclude the amount from income. In addition, there may be state tax benefits. Questions? Contact us.
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