Updated October 30, 2026. Quick answer: The adoption credit for tax year 2026 is up to $17,670, per Rev. Proc. 2025-32. It phases out for modified adjusted gross income above $265,080 and is gone at $305,080. Under Public Law 119-21 part of the credit is now refundable, and the amount used to determine that part is $5,120 for 2026. The 2027 version has its own page, the adoption credit for 2027.
More on the 2027 tax figures: the employer adoption assistance exclusion for 2027.
IRS worksheet walk-throughs: Form 8839 prior year benefits worksheet.
The 2026 amounts
Rev. Proc. 2025-32 gives the 2026 figures in section 4.04. For a child with special needs, “the credit allowed for an adoption of a child with special needs is $17,670.” For other adoptions, “the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $17,670.” On income: “The available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $265,080 and is completely phased out for taxpayers with modified adjusted gross income of $305,080 or more.”
| Item for 2026 | Amount | Source |
|---|---|---|
| Maximum credit (special needs, or expenses up to the amount) | $17,670 | Rev. Proc. 2025-32 section 4.04 |
| Phase-out starts above modified AGI of | $265,080 | Rev. Proc. 2025-32 section 4.04 |
| Completely phased out at modified AGI of | $305,080 | Rev. Proc. 2025-32 section 4.04 |
| Amount used to determine the refundable part | $5,120 | Rev. Proc. 2025-32 section 4.04 |
The phase-out band is $305,080 minus $265,080, or $40,000 (computed), which matches the $40,000 denominator in the statute’s phase-out ratio.
How the phase-out works
The statute reduces the credit by a ratio: the amount allowable is cut by an amount that bears the same ratio to it as the excess of income over the starting point bears to $40,000. Worked example for 2026, with modified adjusted gross income of $285,080 (invented, for the computation) and at least $17,670 of qualified expenses: the excess over the starting point is $285,080 minus $265,080, or $20,000 (computed). The ratio is $20,000 divided by $40,000, or 0.5 (computed). The credit is $17,670 times (1 minus 0.5), or $8,835 (computed), before the refundable and nonrefundable split described next.
What changed: the refundable part
Section 70402 of Public Law 119-21 added a refundable piece: “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.” The amount is indexed. Rev. Proc. 2025-32 notes that “This amount is adjusted for inflation for taxable years beginning after December 31, 2025.” For 2026 it sets the number: “the amount used in § 23(a)(4) to determine the amount of the credit under § 23 that may be refundable is $5,120.”
The carryforward rule changed with it. The Act amended section 23(c)(1) to cover only the “portion of the credit allowable under subsection (a) which is allowed under this subpart”, which means the refundable part is not carried forward. For the rest, prior law (the 2024 edition of section 23, which does not include the 2025 Act) said “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.” The effective date in the Act is “The amendments made by this section shall apply to taxable years beginning after December 31, 2024.”
What counts as an adoption expense
Dollar limits aside, the definitions come from section 23(d). In the 2024 edition, prior law, qualified adoption expenses are “reasonable and necessary adoption fees, court costs, attorney fees, and other expenses”, and they exclude any that are “not reimbursed under an employer program or otherwise.” An eligible child is one who “has not attained age 18, or” is physically or mentally incapable of self-care. Employer adoption assistance has its own limit for 2026: “the maximum amount that can be excluded from an employee’s gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for adoptions by the employee is $17,670.” The forms are covered on Form 8839 and the adoption credit, Form 8839 Part II, the credit limit and phase-out and Form 8839 Part III, employer adoption benefits.
Common mistakes
- Treating the $5,120 as the credit. It is the amount used to determine the refundable part; the credit itself can be as high as $17,670.
- Counting expenses an employer already reimbursed. The definition excludes expenses reimbursed under an employer program or otherwise.
- Using the phase-out as a cliff. The credit shrinks by a ratio across the $40,000 band and is not lost the moment income passes $265,080.
Related: Form 8839 and the adoption credit, Form 8839 Part II, the credit limit and phase-out, Form 8839 Part III, employer adoption benefits, and the adoption credit for 2027.
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Answer againSources
- Internal Revenue Service, Rev. Proc. 2025-32, tax year 2026 inflation-adjusted amounts, as modified by the One, Big, Beautiful Bill Act: www.irs.gov
- Public Law 119-21 (One Big Beautiful Bill Act), July 4, 2025, enacted text (U.S. Government Publishing Office): www.govinfo.gov
- 26 U.S.C. 23, Adoption expenses (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
Read from the primary documents linked above on October 30, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.