Summary

Makes the federal adoption tax credit refundable by moving it into the part of the tax code that contains refundable credits, so adoptive families can receive the credit as a refund even if they have little or no income tax liability. Requires Treasury regulations and guidance to include a standardized third-party affidavit to verify adoptions and qualified adoption expenses. The changes apply to tax years beginning after December 31, 2024, and include a transitional rule treating certain pre-enactment carryforward amounts as part of the first refundable credit year.

Key Points

• Converts the existing nonrefundable adoption tax credit into a refundable credit by relocating it into the refundable-credits subpart of the tax code.
• Requires Treasury regulations and guidance to include a standardized third-party affidavit to verify adoptions and qualified adoption expenses.
• Makes conforming revisions to code cross-references and to the Social Security Act so citations reflect the new statutory placement.
• Effective for taxable years beginning after December 31, 2024.
• Provides a transitional rule that treats pre-enactment carryforward amounts from the immediately preceding taxable year as part of the refundable credit in the first applicable year.
• Increases refundable outlays for eligible adoptive families who lack sufficient tax liability to use a nonrefundable credit.
• Creates administrative tasks for IRS/Treasury to issue regulations, update forms, and implement affidavit verification procedures.
• Does not change the amount or basic eligibility rules of the credit aside from refundability and verification form requirements.

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