Final rules 1
(a) Allowance of credit
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(1) In general In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer.
Amended 2001, 2002
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 411(c)(1)(A), reenacted heading without change and amended text of par. (1) generally. Prior to amendment, text read as follows: “In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter—
“(A) in the case of an adoption of a child other than a child with special needs, the amount of the qualified adoption expenses paid or incurred by the taxpayer, and
“(B) in the case of an adoption of a child with special needs, $10,000.”
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(a)(1), amended heading and text of par. (1) generally. Prior to amendment, text read as follows: “In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer.”
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(2) Year credit allowed The credit under paragraph (1) with respect to any expense shall be allowed—
Amended 1997, 2001, 2002
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 411(c)(1)(C), struck out concluding provisions which read as follows: “In the case of the adoption of a child with special needs, the credit allowed under paragraph (1) shall be allowed for the taxable year in which the adoption becomes final.”
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(c), inserted concluding provisions.
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 1601(h)(2)(A), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “The credit under paragraph (1) with respect to any expense shall be allowed—
“(A) for the taxable year following the taxable year during which such expense is paid or incurred, or
“(B) in the case of an expense which is paid or incurred during the taxable year in which the adoption becomes final, for such taxable year.”
(A) in the case of any expense paid or incurred before the taxable year in which such adoption becomes final, for the taxable year following the taxable year during which such expense is paid or incurred, and
(B) in the case of an expense paid or incurred during or after the taxable year in which such adoption becomes final, for the taxable year in which such expense is paid or incurred.
(3) $10,000 credit for adoption of child with special needs regardless of expenses In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years.
Amended 2002, 2010
- 2010 Pub. L. 111-148 Pub. L. 111–148, § 10909(a)(1)(B), (c), as amended by Pub. L. 111–312, temporarily substituted “$13,170” for “$10,000” in heading and text. See Effective and Termination Dates of 2010 Amendment note below.
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 411(c)(1)(B), added par. (3).
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(4) Portion of credit refundable So much of the credit allowed under paragraph (1) as does not exceed $5,000 shall be treated as a credit allowed under subpart C and not as a credit allowed under this subpart.
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70402(a), added par. (4).
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(b) Limitations
Amended 2001, 2005, 2008, 2010, 2013
- 2013 Pub. L. 112-240 Pub. L. 112–240, § 104(c)(2)(A)(i), struck out par. (4). Prior to amendment, text read as follows: “In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of—
“(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
“(B) the sum of the credits allowable under this subpart (other than this section and section 25D) and section 27 for the taxable year.”
- 2010 Pub. L. 111-148 Pub. L. 111–148, § 10909(b)(2)(I)(i), (c), as amended by Pub. L. 111–312, temporarily struck out par. (4). Text read as follows: “In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of—
“(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
“(B) the sum of the credits allowable under this subpart (other than this section and section 25D) and section 27 for the taxable year.”
See Effective and Termination Dates of 2010 Amendment note below.
- 2008 Pub. L. 110-343 Pub. L. 110–343 inserted “and section 25D” after “this section”.
- 2005 Pub. L. 109-135 Pub. L. 109–135, § 402(i)(3)(A)(i), substituted “In the case of a taxable year to which section 26(a)(2) does not apply, the credit” for “The credit” in introductory provisions.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(f)(1), added par. (4).
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(1) Dollar limitation The aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000.
Amended 2001, 2002, 2010
- 2010 Pub. L. 111-148 Pub. L. 111–148, § 10909(a)(1)(A), (c), as amended by Pub. L. 111–312, temporarily substituted “$13,170” for “$10,000”. See Effective and Termination Dates of 2010 Amendment note below.
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 411(c)(1)(D), substituted “subsection (a)” for “subsection (a)(1)(A)”.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(b)(1)(A), substituted “subsection (a)(1)(A)” for “subsection (a)” and “$10,000” for “$5,000” and struck out “($6,000, in the case of a child with special needs)” before period at end.
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(2) Income limitation
(A) In general The amount allowable as a credit under subsection (a) for any taxable year (determined without regard to subsection (c)) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph but with regard to paragraph (1)) as—
Amended 1998
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6018(f)(1), inserted “(determined without regard to subsection (c))” after “for any taxable year” in introductory provisions.
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(i) the amount (if any) by which the taxpayer’s adjusted gross income exceeds $150,000, bears to
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(b)(2)(A), substituted “$150,000” for “$75,000”.
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(ii) $40,000.
(B) Determination of adjusted gross income For purposes of subparagraph (A), adjusted gross income shall be determined without regard to sections 911, 931, and 933.
Amended 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34, § 1601(h)(2)(B), substituted “determined without regard to sections 911, 931, and 933.” for “determined—
“(i) without regard to sections 911, 931, and 933, and
“(ii) after the application of sections 86, 135, 137, 219, and 469.”
(3) Denial of double benefit
(A) In general No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter.
(B) Grants No credit shall be allowed under subsection (a) for any expense to the extent that funds for such expense are received under any Federal, State, or local program.
(c) Carryforwards of unused credit
Amended 1998, 2001, 2005, 2010, 2013
- 2013 Pub. L. 112-240 Pub. L. 112–240, § 104(c)(2)(A)(ii), (iii), added par. (1), redesignated par. (3) as (2), and struck out former pars. (1) and (2) which related to rule for years in which all personal credits allowed against regular and alternative minimum tax and rule for other years, respectively.
- 2010 Pub. L. 111-148 Pub. L. 111–148, § 10909(b)(2)(I)(ii), (c), as amended by Pub. L. 111–312, temporarily struck out subsec. (c) which related to carryforwards of unused credit. See Effective and Termination Dates of 2010 Amendment note below.
- 2005 Pub. L. 109-135 Pub. L. 109–135, § 402(i)(3)(A)(ii), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by subsection (b)(4) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year. No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.”
- 2005 Pub. L. 109-58 Pub. L. 109–58, § 1335(b)(1), which directed amendment of subsec. (c) by substituting “this section, section 25D, and section 1400C” for “this section and section 1400C”, was repealed by Pub. L. 109–135, § 402(i)(4). See Effective and Termination Dates of 2005 Amendment notes below.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(f)(2)(A), substituted “subsection (b)(4)” for “section 26(a)” and struck out “reduced by the sum of the credits allowable under this subpart (other than this section and sections 24 and 1400C)” before “, such excess”.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 201(b)(2)(E), substituted “and sections 24 and 1400C” for “and section 1400C”.
- 1998 Pub. L. 105-206 Pub. L. 105–206, § 6008(d)(6), inserted “and section 1400C” after “other than this section”.
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(1) In general If the portion of the credit allowable under subsection (a) which is allowed under this subpart for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section and section 25D), such excess shall be carried to the succeeding taxable year and added to the portion of the credit allowable under subsection (a) which is allowed under this subpart for such taxable year.
Amended 2018, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70402(c), which directed substitution of “portion of the credit allowable under subsection (a) which is allowed under this subpart” for “credit allowable under subsection (a)”, was executed by making the substitution both places appearing, to reflect the probable intent of Congress.
- 2018 Pub. L. 115-141 Pub. L. 115–141 substituted “section 25D” for “sections 25D and 1400C”.
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(2) Limitation No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.
(d) Definitions For purposes of this section—
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(1) Qualified adoption expenses The term “qualified adoption expenses” means reasonable and necessary adoption fees, court costs, attorney fees, and other expenses—
“Reasonable” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)
(A) which are directly related to, and the principal purpose of which is for, the legal adoption of an eligible child by the taxpayer,
(B) which are not incurred in violation of State or Federal law or in carrying out any surrogate parenting arrangement,
(C) which are not expenses in connection with the adoption by an individual of a child who is the child of such individual’s spouse, and
(D) which are not reimbursed under an employer program or otherwise.
(2) Eligible child The term “eligible child” means any individual who—
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(d)(1), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “The term ‘eligible child’ means any individual—
“(A) who—
“(i) has not attained age 18, or
“(ii) is physically or mentally incapable of caring for himself, and
“(B) in the case of qualified adoption expenses paid or incurred after December 31, 2001, who is a child with special needs.”
(A) has not attained age 18, or
(B) is physically or mentally incapable of caring for himself.
(3) Child with special needs The term “child with special needs” means any child if—
(A) a State or Indian tribal government has determined that the child cannot or should not be returned to the home of his parents,
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70403(a)(1), inserted “or Indian tribal government” after “a State”.
(B) such State or Indian tribal government has determined that there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance, and
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70403(a)(2), inserted “or Indian tribal government” after “such State”.
(C) such child is a citizen or resident of the United States (as defined in section 217(h)(3)).
(e) Special rules for foreign adoptions In the case of an adoption of a child who is not a citizen or resident of the United States (as defined in section 217(h)(3))—
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(1) subsection (a) shall not apply to any qualified adoption expense with respect to such adoption unless such adoption becomes final, and
(2) any such expense which is paid or incurred before the taxable year in which such adoption becomes final shall be taken into account under this section as if such expense were paid or incurred during such year.
(f) Filing requirements
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(1) Married couples must file joint returns Rules similar to the rules of paragraphs (2), (3), and (4) of section 21(e) shall apply for purposes of this section.
(2) Taxpayer must include TIN
(A) In general No credit shall be allowed under this section with respect to any eligible child unless the taxpayer includes (if known) the name, age, and TIN of such child on the return of tax for the taxable year.
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(B) Other methods The Secretary may, in lieu of the information referred to in subparagraph (A), require other information meeting the purposes of subparagraph (A), including identification of an agent assisting with the adoption.
(g) Basis adjustments For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
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(h) Adjustments for inflation
Amended 2001, 2002, 2010, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70402(b), amended subsec. (h) generally. Prior to amendment, text read as follows: “In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in subsection (a)(3) and paragraphs (1) and (2)(A)(i) of subsection (b) shall be increased by an amount equal to—
“(1) such dollar amount, multiplied by
“(2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2001’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.”
- 2010 Pub. L. 111-148 Pub. L. 111–148, § 10909(a)(1)(C), (c), as amended by Pub. L. 111–312, temporarily amended subsec. (h) generally. Prior to amendment, subsec. (h) related to adjustments for inflation. See Effective and Termination Dates of 2010 Amendment note below.
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 418(a)(1), substituted “subsection (a)(3)” for “subsection (a)(1)(B)” in introductory provisions and inserted concluding provisions.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(e)(1), added subsec. (h) and redesignated former subsec. (h) as (i).
(1) In general In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in paragraphs (3) and (4) of subsection (a) and paragraphs (1) and (2)(A)(i) of subsection (b) shall be increased by an amount equal to—
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(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2001” for “calendar year 2016” in subparagraph (A)(ii) thereof.
(2) Rounding If any amount as increased under paragraph (1) is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.
Amended 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97 substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.
(3) Special rule for refundable portion In the case of the dollar amount in subsection (a)(4), paragraph (1) shall be applied—
(A) by substituting “2025” for “2002” in the matter preceding subparagraph (A), and
(B) by substituting “calendar year 2024” for “calendar year 2001” in subparagraph (B) thereof.
(i) Regulations The Secretary shall prescribe such regulations as may be appropriate to carry out this section and section 137, including regulations which treat unmarried individuals who pay or incur qualified adoption expenses with respect to the same child as 1 taxpayer for purposes of applying the dollar amounts in subsections (a)(3) and (b)(1) of this section and in section 137(b)(1).
Amended 2001, 2002
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 411(c)(1)(E), substituted “the dollar amounts in subsections (a)(3) and (b)(1)” for “the dollar limitation in subsection (b)(1)”.
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 202(e)(1), added subsec. (h) and redesignated former subsec. (h) as (i).