Giving Adoption Tax Credit Where Credit is Due

In 2017, those adopting a child could claim a tax credit valued up to $13,570 per child. The most recent federal statistics show that the adoption tax credit helped roughly 64,000 families throughout the country in 2015 offset the various costs associated with adopting a child. However, this help comes at a price for the national budget, which is why some members of Congress discussed doing away with it in their newly proposed tax plan.

adoption tax credit

In 2015, the adoption tax credit cost the federal government $251 million and projections show its continued use could total up to $3.8 billion over the next 10 years. While these numbers may seem like an astronomical expense, they are dwarfed by the savings adoption creates when compared to the expense of keeping a child in foster care. In a 2011 report, The National Council for Adoption found that when:

“Comparing the per-child cost of subsidized adoption from foster care with the cost of maintaining a child in foster care, one concludes that the child adopted from foster care costs the public only 40 percent as much as the child who remains in foster care. The difference in cost per child per year amounts to $15,480.”

With such large amounts of money at stake for both the federal government and adoptive parents across the country, it is easy to see why members of both the House of Representatives and the Senate were divided by the GOP’s latest tax reform bill that included removing the adoption tax credit. Its attempted removal even left the Republican party divided, as Vice President Mike Pence made it a priority during his time as Indiana’s governor to create a state tax credit that would support adoptions, which is directly linked to the federal adoption tax credit.

While on the surface it may seem like the GOP initially planned on leaving adoptive parents without any support via taxes, in their bill there were provisions to help give $600 per child back to families every year. Rep. Kevin Brady, (R-Tex.) and adoptive father of two, initially backed the removal of the tax credit and said:

“The call is this: Do we want a tax code that has special provisions that you may need once in your life, or do we want a tax code that lowers rates every year of your life?”

Although the removal of the adoption tax credit was done with the thought of saving the country money and distributing it to families in a different manner, critics argued that the bill failed to look at the long term potential costs. Without the credit, more children would spend more time in foster care, which would cost the government nearly $127,000 per child annually. Beyond the yearly expenses, these children face an uphill battle after aging out of the system. Chuck Johnson, president and CEO of the National Council for Adoption, noted that:

“Children who age out of the foster care system have higher than average rates of incarceration and homelessness and often don’t complete their educations, all factors that end up costing the government in the long run.”

While the notion of removing the adoption tax credit left the House and Senate divided, it did help two unlikely groups find common ground. Its potential removal led members of both the LGBTQ community and pro-life activists to speak out on the importance of supporting adoptive families.

Sen. Ben Sasse, (R-Neb.) said in response to the removal of the credit, “Being pro-life means being pro-adoption…Congress must remember this as we work through the details of tax reform in the coming weeks.” The LGBTQ community is one of the biggest proponents of adoption and are 10% more likely to adopt a child than opposite-sex couples according to a report by the Williams Institute.

After receiving backlash from numerous sides, the Ways and Means Committee voted 24-16 to restore the adoption tax credit to the bill on November 9th. Brady said the decision to preserve the credit was made to, “ensure that parents can continue to receive additional tax relief as they open their hearts and their homes to an adopted child.” Both the House and Senate versions of the tax reform bill will retain the adoption tax credit.

Restoring the tax credit has been met praise from members of all ranks from the GOP, including Rep. Trent Franks, (R-Ariz.), who said:

“The adoption tax credit has enormous symbolic, practical and humanitarian meaning and purpose, and I am deeply grateful that it’s been preserved in the tax plan and for all of those who acted to preserve it.”

The attempted removal of the adoption tax credit also received pushback in New Jersey, in particular from Rep. Chris Smith, (R-NJ). In 1991, Smith wrote the original adoption tax credit bill that would go on to be enacted five years later. When asked about the tax credit, Smith told NJ.com that:

“This is targeted to try to make sure we help those families who want to adopt… When you add it all up it’s real money, it at least gives them an additional financial ‘we’ve got your back’ to make sure the adoption goes through.”

Along with the adoption tax credit, adoptive parents in New Jersey are eligible to receive additional financial support through the state’s Subsidized Adoption Program if they adopt from foster care. This program provides a regular monthly payment to help parents meet the everyday needs of their child and a one-time payment to offset the cost of the adoption’s legal fees, as well as Medicaid coverage.

To learn more about the battle to restore the adoption tax credit, click here.

To learn more about your eligibility for the adoption tax credit, click here.

3 thoughts on “Giving Adoption Tax Credit Where Credit is Due

  1. I am a foster parent trying to make a difference in a child’s life. The amount of subsidize I receive for each child is not enough when these children want to do things that can rack up your cost. Not every child turns their life around no matter what you do. The older the child the more parent tendencies they have. I have to struggle to keep a job. These kids need 24/7 care or watchful eyes. My 18 year old got a situation of $250. Has run away various times. Cut class at every opportunity giving. I have church, schools, library and friends exhausted from trying to help. I lost a job from constantly calling out to take them to doctors appointments or going to school or taking the time to look for them. Is not easy keeping a job while fostering a child. This has been a goal of mine to do this and now I feel like it was the wrong decision in my life. I dislike the fact that the discussion is about money and how much it takes to foster or adopt a child. I lost a great paying job while fostering and decided to change my job to be available for these three kids but I feel is not enough.

  2. I am in favor of the tax credit. those of us who adopt and are on Social security and dont make enough money and receive no money or credit because of the amount of taxes they pay.

  3. In my opinion the tax credit offers the adoptive parent a sign of thanks and appreciation. It’s a tall sign that states we care about the love you give to families that are in crisis and the fact that the credit is in place shows gratitude

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