Adoption Tax Credit Bill Introduced

On Tuesday, Representative Bruce Braley (D-IA) introduced the Making Adoption Affordable Act (H.R. 4373), a tax bill to support adoptive families. This bill renews and expands the Adoption Tax Credit, making it both permanent and refundable. Currently, the Adoption Tax Credit can only be accessed to reduce taxes owed, but this bill would enable families adopting in the tax year to access the credit as a refund if they do not owe taxes. H.R. 4373 also permanently reinstates the credit at the 2010 level of $13,360.

In a press release on his website, Braley says, “The adoption tax credit is a small investment that provides a huge return: getting more children into loving homes and out of the costly foster care system…When a policy puts more kids in good families and also saves taxpayers millions of dollars in the process, renewing it should be a no-brainer. Expanding the adoption tax credit makes even more sense and will help even more parents and children.”

The adoption tax credit was first established in 1996. The Affordable Care Act (P.L. 111-148) increased its maximum value from $10,000 to $13,170 and made it refundable for 2010 and 2011. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) made changes to the law by extending the credit through 2012, but as non-refundable and with a reduced maximum to $10,000. Without H.R. 4373, in 2013 and following, it will be limited to special needs adoptions and only available for qualified expenses up to a $6,000 value. The tax credit has helped increase adoptions from approximately 25,000 per year in the 90’s to approximately 50,000 per year today. Since 1996, $4.28 billion in adoption tax credits have been claimed, with $1.2 billion claimed in 2010.

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