In short
The adoption credit covers qualified adoption expenses up to a per-child limit ($17,280 for 2025). Under the One Big Beautiful Bill Act, up to $5,000 of it is refundable starting in 2025.
Key takeaways
- For a special-needs child, the full credit is allowed regardless of actual expenses.
- It phases out at higher levels of modified adjusted gross income.
- Employer adoption assistance can be excluded from income up to the same limit, but the same expenses can't be used twice.
Where it's tested
REG: Filing Status, Credits & Alternative Minimum Tax — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An unmarried taxpayer pays more than half the cost of maintaining a separate household that is the principal residence of the taxpayer's dependent mother. The mother does not live with the taxpayer. What filing status may the taxpayer use?