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Blunt, Casey Introduce Legislation To Help More Families Claim Adoption Tax Credit

April 15, 2015

WASHINGTON D.C. – U.S. Senators Roy Blunt (Mo.) and Bob Casey (Pa.) introduced today the bipartisan Adoption Tax Credit Refundability Act of 2015, legislation to make the current adoption tax credit fully refundable and ensure more families who choose to adopt will benefit from this critical support. Currently, many adopting families do not have enough income to benefit from the credit at all.

“Every day, families in Missouri and nationwide provide loving and safe homes for children in need through adoption, but unfortunately, many families do not have enough income to benefit from the adoption tax credit,” said Blunt. “I’m pleased to join Senator Casey on this bipartisan bill to make it easier for more families who choose to adopt.”

“Providing a vulnerable child with a permanent, loving adoptive home makes a significant impact in the life of that child,” said Casey. “But adoption is expensive, and financial considerations should not prevent a family from adopting a child in need of a home. This legislation is a commonsense approach that ensures more families will be able to claim the adoption tax credit.”

The adoption tax credit was made permanent in the American Taxpayer Relief Act in January 2013. However, that law did not extend the refundability provisions that applied to the adoption tax credit in 2010 and 2011. The Adoption Tax Credit Refundability Act will restore the refundable portion of this critical support for families wishing to adopt.

According to the Department of Health and Human Services (HHS), one-third of all adopted children live in families with annual household income at or below 200 percent of the poverty level. Despite the common misperception that only wealthy families adopt, nearly 46 percent of families adopting from foster care are at or below 200 percent of the federal poverty level. Many of these families’ tax burdens are so low that they cannot benefit from the adoption tax credit at all unless it is refundable.

Data from 2011 indicate that nearly 62 percent of families who filed for the adoption tax credit benefited from refundability. Forty-one percent of families who benefited from refundability (25 percent of all families who took the tax credit) had AGIs under $50,000.

These data indicate that a refundable adoption tax credit plays a significant role in lower-income families’ ability to adopt and support a child from foster care. Older data from a 2006 study cited by HHS demonstrate a significant financial benefit to society, as well: the cost of adoption and permanency is significantly lower than the cost to federal, state and local governments to provide long-term foster care.

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