2021 Adoption Credit
For 2021, the Adoption Credit is $14,440 (Maximum credit), $216,660 (Phase-out threshold) and $256,660 (Fully phased out).
Effective 2021-01-01Source: Rev. Proc. 2020-45 (IRS)Verified 2026-08-29
Compared with 2020
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Maximum credit | $14,300 | $14,440 | +$140 (+1.0%) |
| Phase-out threshold | $214,520 | $216,660 | +$2,140 (+1.0%) |
| Fully phased out | $254,520 | $256,660 | +$2,140 (+0.8%) |
Who it applies to
Taxpayers who paid qualified adoption expenses or who adopted a child with special needs and are claiming the credit under IRC § 23 for a taxable year beginning in 2021.
What changed this year, and why
For taxable years beginning in 2021, the IRS increased the maximum Adoption Credit to $14,440, up from $14,300 in 2020. The income phase-out range also shifted upward.
Common questions
- What is the maximum Adoption Credit for 2021?
- The maximum credit is $14,440 per eligible child. For an adoption of a child with special needs, the full $14,440 is allowed regardless of actual expenses. For other adoptions, the credit is limited to the amount of qualified adoption expenses, up to $14,440.
- At what income level does the Adoption Credit begin to phase out in 2021?
- The credit begins to phase out for taxpayers with modified adjusted gross income above $216,660.
- At what income level is the Adoption Credit fully phased out in 2021?
- The credit is completely phased out for taxpayers with modified adjusted gross income of $256,660 or more.
The credit shrinks as income rises
For 2021, the maximum adoption credit and the exclusion for employer-provided adoption benefits are each $14,440 per eligible child. However, these amounts do not remain at $14,440 for every taxpayer. If your modified adjusted gross income (MAGI) exceeds $216,660, the credit begins to phase out, meaning you will receive only a portion of the full amount. The reduction is gradual as income rises within the phase-out range. Once your MAGI reaches $256,660 or more, the credit is completely eliminated and you cannot claim any adoption credit or exclusion for that tax year. Taxpayers with MAGI of $216,660 or less are not affected by the phase-out and remain eligible for the full benefit. This income-based reduction applies to both the credit claimed on your return and any exclusion for employer-provided adoption benefits.
2021 maximum credit. The maximum credit and the exclusion for employer-provided benefits are both $14,440 per eligible child in 2021. This amount begins to phase out if you have modified adjusted gross income in excess of $216,660 and is completely phased out for modified adjusted gross income of $256,660 or more.
2021 Instructions for Form 8839 (IRS)
The income limit is measured on modified AGI
The income-based phase-out of the adoption credit and the employer-provided adoption benefits exclusion is not measured on regular adjusted gross income. Instead, the IRS uses modified adjusted gross income, or MAGI, as the threshold figure. MAGI starts with your regular AGI and then adds back certain amounts that were previously excluded or deducted, such as foreign earned income. Taxpayers must compute MAGI before they can determine whether their credit or exclusion is reduced. For 2021, the phase-out begins at MAGI above $216,660 and the benefit is fully eliminated at $256,660 or more. If MAGI is $216,660 or less, the income limit has no effect and the full $14,440 credit or exclusion remains available.
Income limit. The income limit on the adoption credit or exclusion is based on modified adjusted gross income (MAGI).
2021 Instructions for Form 8839 (IRS)
The credit and the employer exclusion cannot cover the same expense
Taxpayers who pay qualified adoption expenses and also receive adoption benefits through an employer's assistance program may be able to use both the adoption credit and the employer-provided exclusion in the same tax year. However, the IRS prohibits double-counting: the same dollar of expense cannot support both the credit and the exclusion. A taxpayer must allocate each expense to one benefit or the other. For example, if a taxpayer receives $14,440 in employer-provided adoption benefits that are excluded from income, those dollars are already accounted for and cannot also be counted toward the $14,440 adoption credit. Only expenses paid out-of-pocket, beyond what the employer reimbursed or excluded, may be used to calculate the credit. This rule prevents a taxpayer from receiving a double tax benefit on any single expense.
But, you can't claim both a credit and exclusion for the same expenses.
2021 Instructions for Form 8839 (IRS)
Unused credit carries forward
If the adoption credit a taxpayer is entitled to in 2021 exceeds the tax liability that the credit can offset in that year, the unused portion is not lost. The excess credit carries forward to future tax years. Specifically, an unused adoption credit can be carried forward for up to 5 years, or until it is fully used, whichever happens first. Each year the taxpayer must apply any remaining credit against that year's tax liability before moving on. The Adoption Credit Carryforward Worksheet is used to figure the exact amount available for carryforward. Taxpayers who carry any unused credit into 2022 must retain the worksheet because it is needed to compute the credit in the following year.
Line 16—Credit Carryforward to 2022 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.
2021 Instructions for Form 8839 (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. 2020-45 (IRS)
- Maximum credit
under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $14,440.
- 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 $216,660
- Fully phased out
under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $216,660 and is completely phased out for taxpayers with modified adjusted gross income of $256,660 or more.