Bipartisan bill would make federal adoption tax credit fully refundable 

Lawmakers from both parties are backing legislation to make adoption more financially accessible for families nationwide. 

The Adoption Tax Credit Refundability Act (S.1458), introduced by Sens. Kevin Cramer, R-North Dakota, and Amy Klobuchar, D-Minnesota, would make the existing federal adoption tax credit fully refundable. 

Under current law, adoptive families can deduct up to $16,810 in qualified expenses from their federal tax liability, with any unused credit carried over for up to five years. However, since the credit is not refundable, families with little or no tax liability often miss out on the full benefit. That disproportionately harms lower-income families, such as those who adopt their relatives out of the foster care system. 

“Adoption is a true joy for families, but it is not without significant financial cost,” Cramer said in a statement. “Our bill will make the credit refundable to help all adoptive families access the full amount of the adoption tax credit, regardless of their tax burden. Support for adoptive families is essential to ensure more children find the stable, loving home they deserve.” 

Sen. Ben Ray Luján, D-New Mexico, expressed a similar sentiment. 

“For families across the country, adoption is a blessing that provides children with a loving, stable home,” Luján said in the same release. “Families should not face steep financial costs for opening their arms and offering a permanent home to adoptive children. That is why I’m proud to join my colleagues in introducing the Adoption Tax Credit Refundability Act to lower the financial cost of adoption and help more children find loving homes.” 

The proposal already has 18 co-sponsors in the Senate – 12 Democrats and six Republicans. It has support from over 100 organizations, including several pro-life groups, such as Americans United for Life, March for Life Action, Susan B. Anthony Pro-Life America, and Democrats for Life of America. 

The National Council for Adoption has also endorsed the bill. 

“The Adoption Tax Credit Refundability Act, if enacted, would ensure lower-income families receive the same support as other adoptive families,” Ryan Hanlon, president and CEO of the organization, said in a release. “This, in turn, decreases the risk of an adoption unraveling down the road and provides the resources prospective adoptive families need for critical post-adoption support services.” 

Infant adoption typically costs between $20,000 and $45,000 per child, while foster care adoption typically costs around $2,800 per child, according to BankRate. 

Americans claim more than $300 million worth of the federal adoption tax credit each year, according to the Tax Policy Center. If it were made fully refundable, that number could exceed $1 billion annually, the think tank said. 

The Senate Committee on Finance is currently reviewing the proposal.