The Adoption Tax Credit — Now Refundable: A Victory for Families and Children
The Adoption Tax Credit — Now Refundable: A Victory for Families and Children
Published on:
Sep 03, 2025
Category
Policy & Advocacy
Adoption Tax Credit (ATC) Refundability Act Signed into Law
In June, we shared that the Adoption Tax Credit (ATC) Refundability Act was making historic progress after more than a decade of advocacy.
Today, I’m proud to share that this long-awaited breakthrough is no longer just within reach — it’s now the law.
The Adoption Tax Credit Refundability Act has officially passed both the House and Senate and has been signed into law. Starting in 2025, adoptive families will be able to claim up to $5,000 per child as a refundable credit, bringing long-overdue relief to those most in need.
Why This Matters
Families adopting from foster care, kinship caregivers, and those raising sibling groups or children with complex needs often face overwhelming financial burdens. Refundability ensures these families, many of whom have low or moderate incomes, are no longer excluded from the support the AATC was designed to provide.
This win brings the policy closer to its original intent — making adoption more accessible, equitable, and supportive of permanency for all children, ensuring that no child’s chance at a permanent family is limited by their adoptive family’s income.
A Milestone for Permanency
As of FY 2023, more than 36,000 children in foster care are legally free and waiting to be adopted. Many are older youth, part of sibling groups, or have special needs. Financial barriers should never prevent these youth from having a permanent, loving family.
When the ATC was temporarily refundable in 2010 – 2011, adoptions from foster care increased, especially among families with fewer financial resources. Restoring refundability gives us an opportunity to recreate that momentum, ensuring every child has a better chance at a safe, stable future.
What Comes Next
Now that the law is in place, the focus shifts to implementation and impact.
The next critical steps include:
- Clear IRS guidance to ensure families and tax professionals understand how to claim the refundable portion.
- Widespread outreach and education so families know they are eligible and how to access the credit.
- Ongoing advocacy and oversight to ensure the credit works as intended and remains available for future generations.
At C.A.S.E., we’ll continue to advocate for systems and supports that promote permanency, healing, and well-being for children and families.
A Collective Win
This policy victory is the result of years of tireless advocacy by families, young people with lived experience, nonprofit organizations, and lawmakers on both sides of the aisle. We celebrate this step forward together with gratitude and renewed commitment.
Refundability is not just a tax change — it’s a lifeline. And it’s now reality.
