Sponsors (5)
The bill provides modest, targeted tax relief and better data to inform supports for foster families, but it limits immediate benefit for the poorest households and adds reporting, privacy, and administrative burdens that could deter caregivers and increase compliance costs.
Foster families who qualify receive an $850-per-year federal tax credit, directly lowering their federal income tax bills.
Lower- and middle-income foster families are targeted by phase-in/phaseout rules so modest-income households gain the most practical benefit from the credit.
Required information returns from placement agencies/courts plus HHS and Treasury outreach should make it easier for foster families to document eligibility and learn about the credit, improving uptake and accuracy of claims.
Because the $850 credit is nonrefundable, very low- or no-tax households may receive little or no cash benefit, leaving the poorest foster households with limited immediate relief.
High-income phaseouts and the $17,000 reduction formula limit and complicate benefits for many households, reducing the net value for some middle-class families and adding filing complexity.
Strict disallowance periods for fraud/reckless claims and expanded information-reporting requirements could deter prospective foster parents and create administrative burdens for agencies and courts.
Based on analysis of 3 sections of legislative text.
Creates an $850 nonrefundable tax credit for taxpayers who hosted a qualifying foster child at least one month, with income phaseouts and penalties for fraud/misconduct.
Introduced March 27, 2025 by Erin Houchin · Last progress March 27, 2025
Creates a new nonrefundable federal tax credit of $850 for taxpayers who have a qualifying foster child placed with them for at least one month during the tax year and who are not claiming that child under the child tax credit. The credit phases out for higher earners, includes eligibility and documentation rules, establishes penalties that bar future credits after fraud or reckless misrepresentation, and adds an information-return requirement tied to foster placements. The measure also directs HHS, working with Treasury, to study short-term and emergency foster placements and verification challenges and to report findings to Congress within one year.