2023 Adoption Credit
For 2023, the Adoption Credit figures are $15,950 (Maximum credit), $239,230 (Phase-out threshold) and $279,230 (Fully phased out).
Effective 2023-01-01Source: Rev. Proc. 2022-38 (IRS)Verified 2026-09-02
Compared with 2022
| Item | 2022 | 2023 | Change |
|---|---|---|---|
| Maximum credit | $14,890 | $15,950 | +$1,060 (+7.1%) |
| Phase-out threshold | $223,410 | $239,230 | +$15,820 (+7.1%) |
| Fully phased out | $263,410 | $279,230 | +$15,820 (+6.0%) |
Who it applies to
Taxpayers who paid qualified adoption expenses in 2023 or who adopted a child with special needs in 2023 and are claiming the Adoption Credit on their federal income tax return.
What changed this year, and why
The IRS published the 2023 inflation-adjusted amounts for the federal Adoption Credit under Internal Revenue Code § 23, as set out in Revenue Procedure 2022-38.
Common questions
- What is the maximum Adoption Credit for 2023?
- For taxable years beginning in 2023, the maximum Adoption Credit is $15,950. For an adoption of a child with special needs, the full credit of $15,950 is allowed. For other adoptions, the credit is limited to the amount of qualified adoption expenses paid, up to $15,950.
- When does the 2023 Adoption Credit begin to phase out?
- For 2023, the Adoption Credit begins to phase out when a taxpayer's modified adjusted gross income exceeds $239,230. The credit is completely phased out for taxpayers with modified adjusted gross income of $279,230 or more.
The credit shrinks as income rises
The adoption credit does not stay at its full amount for every taxpayer. Once your modified adjusted gross income exceeds $239,230, the credit begins to shrink. The reduction continues as income rises and, when modified adjusted gross income reaches $279,230 or more, the credit is eliminated entirely. Taxpayers with income at or below the $239,230 threshold can claim the full credit of up to $15,950 per eligible child, subject to other limits. The phase-out applies to both the credit and the employer-provided adoption-benefits exclusion, so higher earners may see one or both benefits reduced or lost.
2023 maximum credit. The maximum credit and the exclusion for employer-provided benefits are both $15,950 per eligible child in 2023. This amount begins to phase out if you have modified adjusted gross income in excess of $239,230 and is completely phased out for modified adjusted gross income of $279,230 or more.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The credit and the employer exclusion cannot cover the same expense
A taxpayer who pays qualified adoption expenses and also receives employer-provided adoption benefits may in general use both the adoption credit and the income exclusion. The rules allow, for example, excluding up to $15,950 of employer-paid benefits and also claiming a credit of up to $15,950 for the same adoption. However, the same dollar of expense cannot be used for both purposes. If an expense has been taken into account to figure the excludable employer benefit, that expense is not available again to compute the credit, and vice versa. The taxpayer must allocate each dollar of qualified adoption expense to either the credit or the exclusion, but not both.
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 $15,950 from your income and also be able to claim a credit of up to $15,950. But, you can't claim both a credit and exclusion for the same expenses. See Qualified Adoption Expenses and Employer-Provided Adoption Benefits, later.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Unused credit carries forward
The adoption credit is nonrefundable, so it can reduce a taxpayer's income-tax liability only to zero in the year it is claimed. When the credit figured on Form 8839, line 14, is larger than the amount that can actually be used on line 15, the difference is not forfeited. The taxpayer may have an unused credit to carry forward to the next 5 years or until used, whichever comes first. The Adoption Credit Carryforward Worksheet in the instructions is used to compute the amount available in future years. Anyone with a carryforward to 2024 must keep that worksheet because it is needed to figure the credit in the following year.
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. Use the Adoption Credit Carryforward Worksheet to figure the amount of your credit carryforward. If you have any unused credit to carry forward to 2024, be sure you keep the worksheet. You will need it to figure your credit for 2024.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
MAGI for the credit adds back income excluded because you live abroad or in a territory
For the 2023 Adoption Credit, the income phase-out is based on modified adjusted gross income (MAGI), which is not the same as the adjusted gross income shown on your return. MAGI starts with the AGI from line 11 of Form 1040, 1040-SR, or 1040-NR, and is then increased by certain amounts that would otherwise be excluded from income. Specifically, the following amounts are added back: the exclusion of income from Puerto Rico, amounts from Form 2555 (lines 45 and 50, which relate to foreign earned income), and the amount from Form 4563, line 15 (which relates to income excluded while living in a U.S. territory such as American Samoa). Because these excluded amounts are added back, MAGI can be higher than the AGI on your tax return, potentially pushing you into the phase-out range sooner than you might expect. For 2023, the credit begins to phase out at a MAGI of $239,230 and is fully phased out at $279,230.
Enter on line 7 the amount from Form 1040, 1040-SR, or 1040-NR, line 11, increased by the total of any: • Exclusion of income from Puerto Rico; • Amounts from Form 2555, lines 45 and 50; and • Amount from Form 4563, line 15.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Expenses paid before a domestic adoption is final wait a year
For a domestic adoption of a U.S. child, the timing of when you can claim qualified adoption expenses depends on when the adoption becomes final. If you pay qualifying expenses in any year before the adoption becomes final, you take the credit in the year after the year of the payment - not in the year you actually paid. Once the adoption becomes final, expenses paid in that year are claimed in that same year, and expenses paid in any later year are claimed in the year of payment. This means that expenses paid in the early stages of a domestic adoption that has not yet been finalized must wait until the following tax year to be claimed. For example, if you paid expenses in 2022 for a domestic adoption that became final in 2023, those 2022 expenses are claimed on your 2023 return. This rule applies only to domestic adoptions; foreign adoptions follow different timing rules and allow expenses to be claimed only in the year the adoption becomes final.
any year before the year the adoption becomes final* the year after the year of the payment. the year the adoption becomes final the year the adoption becomes final. any year after the year the adoption becomes final the year of the payment.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
The form that claims it, and the order its parts are filled in
The Adoption Credit and the exclusion for employer-provided adoption benefits are both claimed on Form 8839. The form has a specific order: Part III must be completed before Part II. This sequencing is required because qualified adoption expenses used to figure the credit in Part II do not include amounts that were reimbursed by an employer under a written qualified adoption assistance program. Part III calculates those employer reimbursements, and only after subtracting them can you determine the credit available in Part II. There is an exception for a child with special needs, where the credit may be available regardless of whether you actually paid expenses. The maximum credit for 2023 is $15,950 per child, and the income limit is based on modified adjusted gross income, with the credit phasing out between $239,230 and $279,230 of MAGI.
For purposes of calculating the adoption credit in Part II, qualified adoption expenses don't include expenses reimbursed by an employer under a written qualified adoption assistance program (see Employer-Provided Adoption Benefits). For this reason, you must complete Form 8839, Part III, before you can figure the credit, if any, in Part II.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
What happens if the adoption falls through
If you pay qualified adoption expenses in an attempt to adopt a U.S. child and the adoption attempt is unsuccessful, you do not lose the credit for those expenses. Instead, the IRS treats those unsuccessful-adoption expenses the same way it treats expenses paid for adoptions that have not become final by the end of the year. Under that rule, expenses paid before the adoption is finalized are claimed in the year after the year the payment was made. This means that each year's expenses from a failed domestic adoption can be claimed on the following year's tax return. The example in the instructions illustrates this: if you paid qualifying expenses in an earlier year and additional expenses in the current year during the same unsuccessful attempt, the earlier year's amount is claimed on the current year's return, while the current year's amount may qualify in the year after that. This rule applies only to domestic adoptions involving a U.S. child, and it allows taxpayers to eventually claim the credit even when the adoption does not go through, up to the $15,950 maximum for 2023.
Unsuccessful adoption. If you paid qualified adoption expenses in an attempt to adopt a U.S. child and the attempt was unsuccessful, treat those expenses in the same manner as expenses you paid for adoptions not final by the end of the year.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Whether the credit is refundable, or only reduces what you owe
The 2023 adoption credit is nonrefundable: it can reduce your federal income tax to zero, but it does not produce a refund by itself. You must complete the Credit Limit Worksheet in the Form 8839 instructions to figure how much of the credit you can actually use against your 2023 tax liability. The maximum credit for 2023 is $15,950 per eligible child, and it phases out for taxpayers with modified adjusted gross income between $239,230 and $279,230. Because the credit only offsets tax you owe, how much of it you can use in 2023 depends on your tax liability that year.
Complete the credit limit worksheet to figure the limit of your nonrefundable adoption credit.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
What counts as a qualified adoption expense
For the 2023 Adoption Credit, a qualified adoption expense must be both reasonable and necessary, and it must be directly related to - and incurred for the principal purpose of - completing the legal adoption of an eligible child. The IRS lists specific categories that count: adoption fees, attorney fees, court costs, travel expenses (including meals and lodging while away from home), and re-adoption expenses when adopting a foreign child. Not every outlay qualifies, however. You cannot claim expenses paid for with state, local, or federal program funds; expenses that violate state or federal law; costs of a surrogate parenting arrangement; expenses for adopting your spouse's child; amounts reimbursed by your employer or any other source; or expenses already allowed as a credit or deduction under another provision of federal income tax law. The credit itself is capped at $15,950 per eligible child for 2023, and it begins to phase out for taxpayers with modified adjusted gross income above $239,230, disappearing entirely once income reaches $279,230.
Qualified adoption expenses are reasonable and necessary expenses directly related to, and for the principal purpose of, the legal adoption of an eligible child.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Adopting your stepchild does not qualify for the credit
The federal Adoption Credit covers many costs of adopting a child - reasonable and necessary fees, attorney fees, court costs, travel expenses while away from home, and re-adoption expenses for a foreign child. But the law draws the line at one common situation: you cannot use the credit to pay for the adoption of your spouse's child. That means if you marry someone who already has a child from a prior relationship and you later adopt that child as your own stepchild, none of the legal fees, court costs, or other expenses you incur for that stepchild adoption qualify. The expenses are simply not "qualified adoption expenses" under the credit, even though every other aspect of the adoption may be perfectly legal and the child may become your dependent. The exclusion exists regardless of the amount you spend or your income level. It does, however, leave the rest of the credit intact: for other adoptions that do qualify, the maximum credit for 2023 is $15,950, and the credit begins to phase out once modified adjusted gross income reaches $239,230, disappearing entirely at $279,230.
Qualified adoption expenses don't include expenses: • For which you received funds under any state, local, or federal program; • That violate state or federal law; • For carrying out a surrogate parenting arrangement; • For the adoption of your spouse's child; • Reimbursed by your employer or otherwise; or • Allowed as a credit or deduction under any other provision of federal income tax law.
2023 Instructions for Form 8839, Qualified Adoption Expenses (IRS)
Who decides a child has special needs
For the 2023 Adoption Credit, a child is considered to have special needs only if a state - including the District of Columbia - has formally made that determination. The state must decide that the child cannot or should not be returned to their parents' home and that the child will not be adopted unless assistance is provided to the adoptive parents. States look at factors such as the child's age, ethnic background, whether the child is part of a minority or sibling group, and whether the child has a medical condition or a physical, mental, or emotional handicap. A child's specific factor or condition alone is not enough; the state itself must issue the special-needs determination before the child is treated as a child with special needs for purposes of the credit. This state determination is what allows an adoptive parent to claim the maximum credit of $15,950 even without paying qualified adoption expenses.
3. The state has determined that the child won't be adopted unless assistance is provided to the adoptive parents. Factors used by states to make this determination include: a. The child's ethnic background and age, b. Whether the child is a member of a minority or sibling group, and c. Whether the child has a medical condition or a physical, mental, or emotional handicap. The state must make a determination that a child has special needs before the child is considered to be a child with special needs. A child having a specific factor or condition isn't enough to establish that the state has made a determination of special needs.
2023 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. 2022-38 (IRS)
- Maximum credit
under § 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $15,950
- 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 $239,230
- Fully phased out
under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $239,230 and is completely phased out for taxpayers with modified adjusted gross income of $279,230 or more.