Adoption Tax Credit [2025]
For hopeful adoptive families in Michigan, the cost of adoption can feel like a mountain standing between you and your dreams of building a family. Legal fees, home studies, agency costs, and travel expenses can add up quickly—leaving many wondering how they’ll afford the journey.
Fortunately, there’s help. The adoption tax credit is one powerful way families can reduce the financial burden of adoption. While Michigan does not currently offer a state-level adoption tax credit, the federal adoption tax credit can be a vital resource. Additionally, the state provides adoption subsidies for eligible families adopting through foster care.
In this guide, we’ll walk you through everything you need to know about the 2024 adoption tax credit, Michigan-specific adoption support options, and how to make the most of this financial assistance.
Looking for a personalized adoption plan tailored to your needs that can address concerns like cost? Schedule a consultation today to speak with a compassionate adoption specialist who can guide you every step of the way.
What is the Adoption Tax Credit?
The federal adoption tax credit helps offset qualified adoption expenses like attorney fees, court costs, and travel. For 2024, the maximum adoption tax credit is $16,810 per child. This amount is adjusted annually for inflation.
It’s a non-refundable credit, which means it can reduce your tax liability to zero, but it won’t result in a refund. However, if your tax liability is lower than the credit, you can carry the unused portion forward for up to five years.
Does Michigan Have an Adoption Tax Credit?
Currently, there is no Michigan adoption tax credit. However, the Michigan Department of Health and Human Services (MDHHS) provides three adoption subsidies, particularly for foster care adoptions:
Who Qualifies for the Adoption Tax Credit?
To qualify for the federal adoption tax credit, you must:
- Have adopted or attempted to adopt a child under 18 (or older with special needs).
- Have qualified adoption expenses, including court costs, attorney fees, and travel.
- Meet income limits (the credit begins to phase out at $239,230 and is fully phased out at $279,230 in 2024).
You can claim the credit after the year the adoption is finalized or, in the case of a failed adoption, in the year following the expenses.
Michigan Adoption Tax Credit Requirements
Although there's no traditional tax credit, the three Michigan adoption subsidies have eligibility criteria:
- Support Subsidy: Child must be placed through the state and meet special needs criteria.
- Medical Subsidy: Requires documented health conditions.
- Nonrecurring Expenses: Families adopting a child with special needs qualify and must apply within 2 years of adoption finalization.
How Many Years Can You Claim the Adoption Tax Credit?
You can carry forward unused portions of the federal adoption tax credit for up to five years. This helps families with low tax liability still take full advantage of the credit over time.
Qualified expenses include:
In Michigan, the nonrecurring adoption subsidy does not extend over multiple years—it’s a one-time reimbursement up to $2,000. The support and medical subsidies are ongoing benefits as long as eligibility criteria are met.
How Does the Adoption Tax Credit Work?
How to apply for the federal adoption tax credit:
- Step 1: Gather documentation of your qualified adoption expenses.
- Step 2: Complete IRS Form 8839 (Qualified Adoption Expenses).
- Step 3: Submit the form with your federal tax return.
- Step 4: If your credit exceeds tax liability, track unused credit for up to five years.
How to apply Michigan’s adoption subsidies:
- Step 1: Apply through your MDHHS caseworker or adoption agency.
- Step 2: Provide documentation for subsidies (e.g., doctor’s notes for medical, receipts for expenses).
- Step 3: Approval is required before adoption finalization for the support and medical subsidies.
- Step 4: Receive benefits via monthly payments or reimbursements.
Contact Us Today
If you’re navigating the adoption process in Michigan, financial planning can feel overwhelming. The good news? You don’t have to figure it out alone.
Speak with a specialist today to explore how the adoption tax credit and Michigan’s adoption subsidies can make your journey more affordable and accessible.
Adoption Tax Credit [2025][FAQ]
Does Michigan have an adoption tax credit?
No. Michigan does not offer a state-level adoption tax credit. However, they provide adoption subsidies for children adopted through foster care, including support, medical, and nonrecurring expense reimbursements.
How much is the adoption credit IRS?
For 2024, the federal adoption tax credit is $16,810 per child. It is non-refundable but can be carried forward for five years.
Who is eligible for the Child Tax Credit in Michigan?
Eligibility for the federal Child Tax Credit is based on income, filing status, and number of children under 17. While it’s separate from the adoption tax credit, many adoptive families in Michigan qualify for both.
Can I claim the tax credit for a failed adoption?
Yes. You can claim the adoption tax credit for qualified expenses related to a failed domestic adoption in the year after the expenses were paid. International failed adoptions are not eligible.
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