2017 Adoption Credit
For 2017, the Adoption Credit is $13,570 (Maximum credit), $203,540 (Phase-out threshold) and $243,540 (Fully phased out).
Effective 2017-01-01Source: Rev. Proc. 2016-55 (IRS)Verified 2026-08-29
Compared with 2016
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Maximum credit | $13,460 | $13,570 | +$110 (+0.8%) |
| Phase-out threshold | $201,920 | $203,540 | +$1,620 (+0.8%) |
| Fully phased out | $241,920 | $243,540 | +$1,620 (+0.7%) |
Who it applies to
Taxpayers who adopted a child in 2017 or are claiming the adoption credit for 2017
What changed this year, and why
For taxable years beginning in 2017, the maximum adoption credit is $13,570 per child. For a child with special needs the full amount is allowed; for other adoptions the credit equals qualified adoption expenses up to $13,570. The credit begins to phase out for taxpayers with modified adjusted gross income above $203,540 and is completely phased out at modified adjusted gross income of $243,540 or more.
Common questions
- Does the adoption credit phase out based on income?
- The credit phases out for taxpayers with modified adjusted gross income above $203,540 and is fully phased out at $243,540 or more.
- Is the maximum credit the same for a special-needs adoption as for other adoptions?
- Yes. For an adoption of a child with special needs, the full $13,570 credit is allowed regardless of actual expenses. For other adoptions, the credit is limited to qualified adoption expenses up to $13,570.
The credit shrinks as income rises
For 2017, the adoption credit starts to shrink once your modified adjusted gross income goes above $203,540. As your income rises between that threshold and the upper limit, the credit is reduced proportionally. Once your modified adjusted gross income reaches $243,540 or more, the credit is eliminated entirely - you cannot claim any adoption credit at all. Taxpayers with income at or below $203,540 can claim the full credit of up to $13,570 per eligible child without any reduction. The same phase-out range applies to the employer-provided adoption benefits exclusion, so both the credit and the exclusion are reduced and eliminated at the same income levels.
This amount begins to phase out if you have modified adjusted gross income in excess of $203,540 and is completely phased out for modified adjusted gross income of $243,540 or more.
2017 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, or MAGI, rather than plain adjusted gross income. For 2017, if your MAGI is at or below the phase-out threshold of $203,540, the income limit does not affect your credit or exclusion at all. Above that level, the credit or exclusion is reduced. Once your MAGI reaches $243,540 or more, the income limit eliminates your credit or exclusion entirely. Because MAGI is the measure used, you must calculate your modified adjusted gross income before you can determine how much of the $13,570 maximum credit per eligible child you are actually allowed to claim.
The income limit on the adoption credit or exclusion is based on modified adjusted gross income (MAGI).
2017 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The credit and the employer exclusion cannot cover the same expense
You can claim both the adoption credit and the employer-provided adoption benefits exclusion for expenses of adopting an eligible child, but you cannot claim both a credit and an exclusion for the same expenses. This means you must divide your qualified adoption expenses between the two benefits: some expenses go toward the credit, and the remaining expenses go toward the exclusion. The total of both benefits for a single child in 2017 cannot exceed $13,570. For example, if your employer reimbursed you for part of your adoption costs and you exclude that reimbursement from your income, you cannot also count those same reimbursed expenses when calculating your adoption credit. You must allocate your expenses carefully so that no dollar of expense is used for both benefits.
But, you can't claim both a credit and exclusion for the same expenses.
2017 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Unused credit carries forward
If the adoption credit you are allowed in 2017 is less than the total credit you calculated, you may have an unused credit that you can carry forward to the next 5 years or until it is fully used, whichever comes first. This situation arises when the credit is limited by your tax liability or by the income phase-out. To figure the exact amount of credit to carry forward to 2018, you must complete the Adoption Credit Carryforward Worksheet. If you do have any unused credit to carry forward, you should keep that worksheet because you will need it to calculate your credit for 2018. The carryforward rule ensures that taxpayers who cannot use the full $13,570 credit in one year due to limits still have the opportunity to benefit from the remaining credit in future tax years.
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.
2017 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. 2016-55 (IRS)
- Maximum credit
under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,570.
- 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 $203,540
- 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 $203,540 and is completely phased out for taxpayers with modified adjusted gross income of $243,540 or more.