On Monday, June 10, Senator Roy Blunt (R-MO), Senator Bob Casey (D-PA) and Senator James Inhofe (R-OK) announced they will introduce the “Adoption Tax Credit Refundability Act.” The legislation will modify the current tax credit provided to families that adopt by making it refundable. CWLA has endorsed the bill.

In their joint statement Senator Blunt said, “Over 100,000 children are waiting for adoption into a family who can give them the loving home they deserve. This bipartisan bill will restore the refundability portion of the tax credit to make adoption more affordable for hardworking families. I urge my colleagues to join me in this effort to make adoption a more viable option for parents who are eager to welcome a child into their home.”

A tax credit is more generous than a tax deduction which simply reduces a family’s income before they calculate their federal taxes. With a credit a family determines their taxes owed and then reduces that tax payment by the credit amount. Many tax credits in the federal tax code reduce the tax payment until it is wiped out. For a family with a lower income, various deductions and credits could already eliminate the federal tax (not counting the Social Security/Medicare payroll tax). As a result, many of the families that adopt children in foster care, with a lower income do not benefit from a tax credit. By making it refundable these families would still get a tax refund based on how large the size of the tax credit.

Information provided by HHS through the three Senators indicate that one-third of all adopted children live in families with annual household incomes at or below 200 percent of the poverty level and nearly 46 percent of children adopted from foster care live in families with incomes at or below 200 percent of the federal poverty level.

Senator Casey said that “It is a common misconception that only wealthy families adopt. We must do all we can do to ensure that all children are afforded the opportunity to grow up in a permanent, loving home. This legislation is a commonsense approach to improve lower-income families’ ability to adopt and support children from foster care.”

Over its lifetime, the adoption tax break has taken various forms starting out as a deduction, becoming a credit and

About the Author:

John Sciamanna is CWLA's Vice President of Public Policy.

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