A bill that would restore the refundability of the adoption tax credit is gaining bipartisan and bicameral support. The tax credit seeks to assist families that adopt. It was refundable for a brief period in 2010 and 2011 and in making it refundable the credit is a much greater assistance to families that adopt from foster care.
The temporary extension to refundability was a part of the ACA and it provided the expanded tax break for 2010 and 2011 but some policies associated with the ACA have been more difficult to resolve or continue. Over the past month however the support for a restoration of the credit has been growing in both parties. Senator Bob Casey (D-PA) has sponsored a bill since the last Congress and he has reintroduced that bill, S 950. In the past month, a House version has been introduced by Congresswoman Diane Black (R-TN) and Congressman Danny Davis (D-IL). HR 2434 has also picked up support from several other House Republican and Democrats.
Making it refundable is a much greater assistance to families that adopt from foster care because these families tend to have lower incomes and they may also be more willing to adopt sibling groups of children. As a result they may not benefit from a standard tax credit. Refundable tax credits allow a taxpayer to receive a refund even when their federal tax withholding (not including the FICA/Social Security-Medicare withholding) is reduced to zero.
It’s still remains to be seen what if anything will happen to the federal tax code but there is a potential for some bipartisan deals particularly when it comes to corporate taxation. In light of the recent court decision on the ACA, the Congress still has a reconciliation order that they can use any number of ways including a reconciliation bill that focuses on a tax package, especially if the administration and Congress decide they want to find an area where they can work together.