2016 Adoption Credit
For 2016, the Adoption Credit is $13,460 (Maximum credit), $201,920 (Phase-out threshold) and $241,920 (Fully phased out).
Effective 2016-01-01Source: Rev. Proc. 2015-53 (IRS)Verified 2026-08-29
Who it applies to
Taxpayers who paid qualified adoption expenses or adopted a child with special needs in taxable years beginning in 2016.
What changed this year, and why
The IRS published the 2016 inflation-adjusted amounts for the Adoption Credit under Internal Revenue Code § 23.
Common questions
- What is the maximum adoption credit for 2016?
- For 2016, the maximum adoption credit is $13,460 per child. For adoptions of children with special needs, the full $13,460 is allowed regardless of actual expenses. For other adoptions, the credit is limited to the amount of qualified adoption expenses, up to $13,460.
- Does the adoption credit phase out based on income?
- For 2016, the adoption credit begins to phase out when modified adjusted gross income exceeds $201,920 and is completely phased out at $241,920 or more.
The credit shrinks as income rises
The 2016 adoption credit of $13,460 per eligible child does not remain available to all taxpayers regardless of income. The credit begins to phase out if you have modified adjusted gross income in excess of $201,920 and is completely phased out for modified adjusted gross income of $241,920 or more. This means taxpayers with MAGI at or below $201,920 can claim the full credit, while those with income between the threshold and the complete phase-out point receive a reduced credit amount. Taxpayers with MAGI of $241,920 or more cannot claim any adoption credit for that tax year. The phase-out applies separately to the employer-provided adoption benefits exclusion, using the same income thresholds.
The maximum credit and the exclusion for employer-provided benefits are both $13,460 per eligible child in 2016. This amount begins to phase out if you have modified adjusted gross income in excess of $201,920 and is completely phased out for modified adjusted gross income of $241,920 or more.
2016 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The income limit is measured on modified AGI
The income limit that determines whether your adoption credit is reduced or eliminated is based on modified adjusted gross income, commonly called MAGI. For 2016, the IRS provides a table showing three income ranges and their effect on your credit. If your MAGI is $201,920 or less, the income limit does not affect your credit at all, and you can claim the full $13,460 per eligible child. If your MAGI falls between $201,921 and $241,919, the income limit will reduce your credit. If your MAGI reaches $241,920 or more, the income limit will eliminate your credit entirely. This means that to determine whether you qualify for the full credit, a partial credit, or no credit, you must first calculate your modified adjusted gross income and compare it to these threshold amounts. The same MAGI-based limit applies to the exclusion for employer-provided adoption benefits.
Income limit. The income limit on the adoption credit or exclusion is based on modified adjusted gross income (MAGI). For 2016, use the following table to see if the income limit will affect your credit or exclusion. IF your MAGI is... THEN the income limit... $201,920 or less won't affect your credit or exclusion. Between $201,921 and $241,919 will reduce your credit or exclusion. $241,920 or more will eliminate your credit or exclusion.
2016 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The credit and the employer exclusion cannot cover the same expense
Taxpayers can claim both the adoption credit and the exclusion for employer-provided adoption benefits in the same tax year, but they cannot apply both benefits to the same qualified adoption expenses. This means you must allocate your expenses between the two benefits. For example, if you have qualified adoption expenses and your employer provided adoption benefits, you could potentially exclude up to $13,460 from your income and also claim a credit of up to $13,460. However, the same dollar of expense cannot count toward both the credit and the exclusion. You must decide which expenses to apply to the exclusion and which to apply to the credit. This allocation rule prevents double-dipping and ensures that the total tax benefit does not exceed the actual qualified expenses incurred.
You can claim both the exclusion and the credit for expenses of adopting an eligible child. For example, depending on the cost of the adoption, you may be able to exclude up to $13,460 from your income and also be able to claim a credit of up to $13,460. But, you can't claim both a credit and exclusion for the same expenses.
2016 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Unused credit carries forward
If your adoption credit for 2016 exceeds your tax liability, you may have an unused portion that can be carried forward to future tax years. The IRS allows you to carry forward the unused credit to the next 5 years or until it is fully used, whichever comes first. To determine the amount available for carryforward, you must complete the Adoption Credit Carryforward Worksheet provided in the instructions. If you have any unused credit to carry forward to 2017, you should keep this worksheet because you will need it to figure your credit for that year. This carryforward provision ensures that taxpayers who cannot use their full $13,460 credit in 2016 due to insufficient tax liability have the opportunity to benefit from the credit in subsequent years when their tax situation may be more favorable.
If Form 8839, line 15 is smaller than line 14, you may have an unused credit to carry forward to the next 5 years or until used, whichever comes first.
2016 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2015-53 (IRS)
- Maximum credit
under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,460.
- Phase-out threshold
The available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $201,920
- Fully phased out
The available adoption credit begins to phase out under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $201,920 and is completely phased out for taxpayers with modified adjusted gross income of $241,920 or more.