Adopting in 2026? This IRS Change Could Mean up to $17,670 Back
Image source: Getty Images
Here's some good news for families planning to adopt next year: The IRS is making it cheaper. The 2026 adoption tax credit jumps to $17,670 per child, and thousands of dollars could come back to you even if you don't owe any federal tax.
For many parents, this update will make a noticeable difference in the cost of welcoming a child into their family next year.
How the 2026 adoption tax credit works
The adoption credit helps offset qualified expenses related to adopting a child. That can include agency fees, court costs, travel, and other adoption-related expenses. Once the adoption is finalized, you can claim the credit on your federal tax return for the year in which the process was completed.
For 2026, the maximum credit increases from $16,810 to $17,670, and income phaseouts will adjust upward as well, meaning more middle-income families will qualify. The refundable portion is also expanding, allowing part of the credit to be paid back to you even if your tax liability is smaller than the full amount.
If you're adopting through an employer that provides assistance, the employer adoption benefit will also be indexed for inflation beginning in 2026. That means your company could help cover part of your costs, and you could still qualify for the tax credit on top of it.
What you can do now to prepare
If you're planning an adoption in 2025 or 2026, it's worth tracking every eligible expense. Keep receipts, invoices, and travel documentation throughout the process. The IRS allows you to claim qualified expenses for domestic adoptions even before they're finalized, though the credit can only be applied once per child.
It's also smart to think about where to keep your adoption funds in the meantime. Some families save for months or years before the process begins, and the right account can help you earn interest along the way. Compare the best high-yield savings accounts here to find options still paying around 4.00% APY.
For those balancing long-term goals, part of your future refund could also go toward building security for your child's future. It's worth looking into starting a 529 plan or contributing to a retirement account like an IRA to free up future cash flow.
Why this credit matters
Adoption costs can easily reach $20,000 to $50,000, depending on the route you take. The IRS credit doesn't cover everything, but it can remove a big chunk of the financial stress. With the 2026 increase, families could see thousands more in combined tax benefits than just a few years ago.
Between higher refund potential and employer benefit expansions, 2026 could be one of the best years in recent memory to complete an adoption. Taking a few steps now to organize your paperwork, and your finances, could help make your family's next chapter a lot more affordable.
Our Research Expert
Jake FitzGerald is a full-time Editorial Strategist and Personal Finance Writer at Motley Fool Money, leading content production and distribution while also writing about credit cards, bank accounts, and other financial products. He has more than a decade of experience editing and shaping financial content to give readers clear, trustworthy money advice. His work focuses on delivering practical insights that empower people to make smarter financial decisions. Off the clock, he’s a fan of college football tailgates and still loyal to his favorite putter -- despite what his short game suggests.