You Make the Call - Oct. 2, 2025

Question: John and Sarah adopted a child in 2025. Their total qualified adoption expenses were $17,280. They have little to no tax liability on their tax return. Can they still benefit from the adoption credit, and how much is refundable?

Answer: Yes, John and Sarah can still benefit from the adoption credit. Due to changes made by the One Big Beautiful Bill Act (OBBBA), beginning with tax years after Dec. 31, 2024, up to $5,000 of the adoption credit is refundable annually. This means that even if they owe no federal income tax, they can receive up to $5,000 back as a refund.

In John and Sarah's case, their adoption expenses of $17,280 make them eligible for the full credit amount. Of this, $5,000 is refundable and can be received as a refund even without tax liability. The remaining $12,280 is nonrefundable, which can only offset any tax they owe on their tax return. If they cannot use the full $12,280 in 2025, the unused nonrefundable amount may be carried forward for up to five years.

The answer remains the same whether the adoption is domestic or international.