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Internal Revenue Code · 26 U.S.C.

§ 23. Adoption expenses

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 23

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status
In force
Added
August 20, 1996 by Pub. L. 104–188
Last amended
July 4, 2025 by Pub. L. 119–21
Amendments
13 dated changes in the source credit
Length
9 subsections · 1,561 words · about 7 min to read
Defines
3 terms
Cross-references
cites 9; cited by 5 Code sections and 16 other regulations
(a) Allowance of credit
(1) In general

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer.

(2) Year credit allowed The credit under paragraph (1) with respect to any expense shall be allowed—
(A) in the case of any expense paid or incurred before the taxable year in which such adoption becomes final, for the taxable year following the taxable year during which such expense is paid or incurred, and
(B) in the case of an expense paid or incurred during or after the taxable year in which such adoption becomes final, for the taxable year in which such expense is paid or incurred.
(3) $10,000 credit for adoption of child with special needs regardless of expenses

In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years.

(4) Portion of credit refundable

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.

(b) Limitations
(1) Dollar limitation

The aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000.

(2) Income limitation
(A) In general The amount allowable as a credit under subsection (a) for any taxable year (determined without regard to subsection (c)) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph but with regard to paragraph (1)) as—
(i) the amount (if any) by which the taxpayer’s adjusted gross income exceeds $150,000, bears to
(ii) $40,000.
(B) Determination of adjusted gross income

For purposes of subparagraph (A), adjusted gross income shall be determined without regard to sections 911, 931, and 933.

(3) Denial of double benefit
(A) In general

No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter.

(B) Grants

No credit shall be allowed under subsection (a) for any expense to the extent that funds for such expense are received under any Federal, State, or local program.

(c) Carryforwards of unused credit
(1) In general

If the portion of the credit allowable under subsection (a) which is allowed under this subpart for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section and section 25D), such excess shall be carried to the succeeding taxable year and added to the portion of the credit allowable under subsection (a) which is allowed under this subpart for such taxable year.

(2) Limitation

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. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.

(d) Definitions For purposes of this section—
(1) Qualified adoption expenses The term “qualified adoption expenses” means reasonable and necessary adoption fees, court costs, attorney fees, and other expenses—
(A) which are directly related to, and the principal purpose of which is for, the legal adoption of an eligible child by the taxpayer,
(B) which are not incurred in violation of State or Federal law or in carrying out any surrogate parenting arrangement,
(C) which are not expenses in connection with the adoption by an individual of a child who is the child of such individual’s spouse, and
(D) which are not reimbursed under an employer program or otherwise.
(2) Eligible child The term “eligible child” means any individual who—
(A) has not attained age 18, or
(B) is physically or mentally incapable of caring for himself.
(3) Child with special needs The term “child with special needs” means any child if—
(A) a State or Indian tribal government has determined that the child cannot or should not be returned to the home of his parents,
(B) such State or Indian tribal government has determined that there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance, and
(C) such child is a citizen or resident of the United States (as defined in section 217(h)(3)).
(e) Special rules for foreign adoptions In the case of an adoption of a child who is not a citizen or resident of the United States (as defined in section 217(h)(3))—
(1) subsection (a) shall not apply to any qualified adoption expense with respect to such adoption unless such adoption becomes final, and
(2) any such expense which is paid or incurred before the taxable year in which such adoption becomes final shall be taken into account under this section as if such expense were paid or incurred during such year.
(f) Filing requirements
(1) Married couples must file joint returns

Rules similar to the rules of paragraphs (2), (3), and (4) of section 21(e) shall apply for purposes of this section.

(2) Taxpayer must include TIN
(A) In general

No credit shall be allowed under this section with respect to any eligible child unless the taxpayer includes (if known) the name, age, and TIN of such child on the return of tax for the taxable year.

(B) Other methods

The Secretary may, in lieu of the information referred to in subparagraph (A), require other information meeting the purposes of subparagraph (A), including identification of an agent assisting with the adoption.

(g) Basis adjustments

For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

(h) Adjustments for inflation
(1) In general In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in paragraphs (3) and (4) of subsection (a) and paragraphs (1) and (2)(A)(i) of subsection (b) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2001” for “calendar year 2016” in subparagraph (A)(ii) thereof.
(2) Rounding

If any amount as increased under paragraph (1) is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.

(3) Special rule for refundable portion In the case of the dollar amount in subsection (a)(4), paragraph (1) shall be applied—
(A) by substituting “2025” for “2002” in the matter preceding subparagraph (A), and
(B) by substituting “calendar year 2024” for “calendar year 2001” in subparagraph (B) thereof.
(i) Regulations

The Secretary shall prescribe such regulations as may be appropriate to carry out this section and section 137, including regulations which treat unmarried individuals who pay or incur qualified adoption expenses with respect to the same child as 1 taxpayer for purposes of applying the dollar amounts in subsections (a)(3) and (b)(1) of this section and in section 137(b)(1).

(Added Pub. L. 104–188, title I, § 1807(a), Aug. 20, 1996, 110 Stat. 1899, § 23; amended Pub. L. 105–34, title XVI, § 1601(h)(2)(A), (B), Aug. 5, 1997, 111 Stat. 1092; Pub. L. 105–206, title VI, §§ 6008(d)(6), 6018(f)(1), July 22, 1998, 112 Stat. 812, 823; Pub. L. 107–16, title II, §§ 201(b)(2)(E), 202(a)(1), (b)(1)(A), (2)(A), (c), (d)(1), (e)(1), (f)(1), (2)(A), June 7, 2001, 115 Stat. 46–49; Pub. L. 107–147, title IV, §§ 411(c)(1)(A)–(E), 418(a)(1), Mar. 9, 2002, 116 Stat. 45, 57; Pub. L. 109–58, title XIII, § 1335(b)(1), Aug. 8, 2005, 119 Stat. 1036; Pub. L. 109–135, title IV, § 402(i)(3)(A), (4), Dec. 21, 2005, 119 Stat. 2612, 2615; Pub. L. 110–343, div. B, title I, § 106(e)(2)(A), Oct. 3, 2008, 122 Stat. 3817; renumbered § 36C, amended, and renumbered § 23, Pub. L. 111–148, title X, § 10909(a)(1), (b)(1), (2)(I), (c), Mar. 23, 2010, 124 Stat. 1021, 1022, 1023; Pub. L. 111–312, title I, § 101(b)(1), Dec. 17, 2010, 124 Stat. 3298; Pub. L. 112–240, title I, § 104(c)(2)(A), Jan. 2, 2013, 126 Stat. 2321; Pub. L. 115–97, title I, § 11002(d)(1)(A), Dec. 22, 2017, 131 Stat. 2060; Pub. L. 115–141, div. U, title IV, § 401(d)(4)(B)(i), Mar. 23, 2018, 132 Stat. 1209; Pub. L. 119–21, title VII, §§ 70402(a)–(c), 70403(a), July 4, 2025, 139 Stat. 213, 214.)

Terms defined here

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Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 9 other sections

Cited by 5 Code sections

Cited in 16 regulations not issued under it

Amendment history

From the source credit and the official notes, newest first.

  1. Amended by Pub. L. 119–21Parts changed in 2025: (a)(4) (c)(1) (d)(3)(A) (d)(3)(B) (h)
  2. Amended by Pub. L. 115–141Parts changed in 2018: (c)(1)
  3. Amended by Pub. L. 115–97Parts changed in 2017: (h)(2)
  4. Amended by Pub. L. 112–240Parts changed in 2013: (b)(4) (c)
  5. Amended by Pub. L. 111–312Parts changed in 2010: (a)(3) (b)(1) (b)(4) (c) (h)
  6. Amended by Pub. L. 111–148
  7. Amended by Pub. L. 110–343Parts changed in 2008: (b)(4)(B)
  8. Amended by Pub. L. 109–135Parts changed in 2005: (b)(4) (c)
  9. Amended by Pub. L. 109–58
  10. Amended by Pub. L. 107–147Parts changed in 2002: (a)(1) (a)(2) (a)(3) (b)(1) (h) (i)
  11. Amended by Pub. L. 107–16Parts changed in 2001: (a)(1) (a)(2) (b)(1) (b)(2)(A)(i) (b)(4) (c) (d)(2) (h)
  12. Amended by Pub. L. 105–206Parts changed in 1998: (b)(2)(A) (c)
  13. Amended by Pub. L. 105–34Parts changed in 1997: (a)(2) (b)(2)(B)
  14. Added by Pub. L. 104–188

Where it sits in the Code

  1. Subtitle A Income Taxes
  2. Chapter 1 NORMAL TAXES AND SURTAXES
  3. Subchapter A Determination of Tax Liability
  4. Part IV CREDITS AGAINST TAX
  5. Subpart A Nonrefundable Personal Credits

Nearby sections

Official notes

The Law Revision Counsel's notes for this section (amendments, effective dates and related laws) are long, so they have their own page.