Article Nov 9, 2017

Why the Adoption Tax Credit matters

What is the adoption tax credit?

Initially passed in 1997, the adoption tax credit has had broad, bipartisan support for its entire existence. The adoption tax credit eases the financial burden families face when growing their families through adoption. Since 1997, hundreds of thousands of families have used the tax credit to make adoption financially feasible.

The adoption tax credit is available for families who adopt through foster care, private domestic adoptions, and intercountry adoption. The credit is currently $13,570, but families making more than $243,540 may not claim the credit, and families making more than $203,540 may only claim a partial credit.

Families who adopt special needs children may claim the entire credit. Families who adopt children without special needs may claim their qualified expenses, up to $13,570.

Adoption is central to the Gospel of Jesus Christ.

How much does adoption cost?

Adoption can be very expensive. There are a number of different variables, which means there is no “average” cost of an adoption. But intercountry adoptions can easily cost more than $60,000 or $70,000. For many Americans, the adoption tax credit can make a huge difference and in some cases determines whether a family will be able to afford to adopt.

Over 60 percent of adopted children are adopted by middle- and lower-income taxpayers, and almost half of children adopted from foster care live in families with household incomes at or below 200 percent of the federal poverty level.

Just as important to consider is what adoption saves the government. The government saves between $65,000 and $127,000 for every child who is adopted rather than placed in long-term foster care.

Why is the adoption tax credit important?

Because the adoption tax credit eases the financial burden of adoption and brings adoption within reach for many families, the credit helps to increase the number of adoptions that happen each year.

Why should Christians care about adoption?

Adoption is central to the Gospel of Jesus Christ. Not only does the Bible provide numerous instances of God protecting orphans and urging His followers to do the same (James 1:27; Psalm 68:5-6; Isaiah 1:17), but the Bible also tells us that every Christian is adopted into the Kingdom of God through Jesus Christ (Romans 8:15; Ephesians 1:4-5). 

Adoption strengthens families, communities, and our nation. When vulnerable children without families are adopted into loving families – whether through foster care, domestic adoption, or intercountry adoption – we are all better off. Children within loving families live healthier and more successful lives compared to those in the foster care system, whether you’re looking at graduation and employment rates or incarceration and homelessness.

What happened to the adoption tax credit in the tax reform plan released yesterday?

The adoption tax credit, like many other tax credits, would be eliminated under theproposal released yesterday.

It is true that there is an increase to the child tax credit, a new family tax credit, and an overall decrease in tax rates. These policy proposals will work to lower the tax burden for most American families.

But these proposals don’t and can’t replace the adoption tax credit. By eliminating theadoption tax credit, the tax reform proposal would make adoption more expensive for most families, even if their tax burden is less over time.

What is the ERLC doing to help?

The ERLC is having productive and encouraging conversations with Republican leadership in the House of Representatives about this important tax credit. While these conversations have been encouraging, we will remain focused on this issue until we have been assured that the adoption tax credit will be protected in the final version of any tax reform bill passed by Congress.

If you are concerned about this issue, we encourage you to call your U.S. representative and share those concerns. If you don’t know who your U.S. representative is, you can find that information here.