Adoption Tax Credit 2026: Get Up to $17,670 Back
Adoption costs are rising, but so is the tax relief. For the 2026 tax year, the maximum credit has increased to $17,670 per child. Even more importantly, new legislation has made this credit Partially Refundable (up to $5,120). This means you can now get cash back even if you owe zero taxes. Here is how to navigate the new limits and the 5-year carryforward rule.
1. The Rule: Hybrid Credit (Refund + Carryover)
As of 2026, the credit is no longer strictly “Non-Refundable.” It operates on a two-tier system.
Tier 2 (Non-Refundable): The remaining $12,550 ($17,670 – $5,120) is used to lower your tax liability to zero.
Carryover: Anything left from Tier 2 moves to next year.
2. Eligible Expenses (Checklist)
Only “Qualified Adoption Expenses” count toward the $17,670 limit.
| Expense Category | Eligible (Yes ✅) | Ineligible (No ❌) |
|---|---|---|
| Legal | Attorney fees, court costs. | Surrogate mother fees. |
| Agency | Adoption agency fees. | Step-child adoption. |
| Travel | Travel (meals/lodging) to get child. | Vacation side-trips. |
3. Timeline: How the New “Split” Works
This chart shows how a $17,670 credit applies if your annual tax bill is only $5,000.
| Action | Amount | Result |
|---|---|---|
| 1. Offset Tax | $5,000 | |
| 2. Cash Refund | $5,120 | |
| 3. Carryover | $7,550 |
4. Strategy: Income Phaseout Limits
The income caps have risen for 2026.
- Phase-out Start: The credit begins to reduce if your Modified Adjusted Gross Income (MAGI) exceeds $265,080.
- Phase-out End: The credit is fully eliminated once your MAGI hits $305,080.
- The Move: If you are near $265k, maximize your 401(k) contributions to lower your MAGI and preserve the full credit.
5. Warning: Failed Adoptions
The timing rule depends on where the child is from.
⛔ Domestic vs. Foreign
Don’t claim too early for international cases.
- U.S. Adoption: You generally CAN claim the credit for qualified expenses paid, even if the adoption is never finalized. Claim it the year after expenses were paid.
- Foreign Adoption: You generally CANNOT claim any credit unless the adoption becomes final. If it fails, you get $0.