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VFA Policy Intern Blog: Adoption Incentives and Benefits

Adoption Incentives and Benefits

By Michael Tuskey

Published 6/26

    Families who adopt, experience the joy of being able to provide a child love and support in a stable environment that they never had the chance to live in. Organizational effort from groups like Voice for Adoption (VFA) and Child Welfare League of America (CWLA) have helped those looking to find children in need of a family. While adoption is clearly about giving children the joys of a family, the cost of adoption is quite substantial. Fortunately, the federal government has assisted adopting families with cost burdens through adoption benefits and incentives.   

The Adoption Tax Credit is an adoption benefit that helps families with offsetting the cost of adoption, if they fall under the rules of the tax credit. Qualifying taxpayers may receive a credit up to $13,460. The credit is reduced for families who make over $201,921 and is completely phased out for those who make $241,920 and over. This is to ensure that more families from different socioeconomic backgrounds can adopt children from the system. While the credit is currently not refundable, the credit can be carried over for up to 5 years on their taxes. The credit’s purpose was to mediate the cost associated with adoption, including travel costs and adoption agency fees. Additionally, some employers offer adoption assistance programs to employees who adopt by allowing them to reduce income tax payments up to $13,460  

Under the Social Security Act’s Title IV-E Adoption Assistance, a family who adopts a special needs child receives direct federal subsidies to assist with the child’s care. The subsidies mainly fall under healthcare costs for treatment of mental and physical illnesses and the child is enrolled under Medicaid. This situation occurs most often with foster care children who are experience great trauma. Title IV-E is crucial for incentivizing adoption from foster care because it assures families who may not have health insurance that can cover their adopted child’s needs, that the child would receive the best care and no financial costs would be imposed. This ensures that the main priority is for the child to heal and to develop with their new family.

On a state-level, adoptions are greatly incentivized by the federal government through the payment of bonuses, which are rewarded based on the states’ current number of children in their foster care system. In addition, states create their own incentives for adoptions which include direct payments to the adopting families, varying by state and circumstance of the adoption. States can also provide partial to full coverage for a child’s medical cost if they do not qualify for Federal Title IV-E.

All of these incentives and benefits were designed to help families absorb the significant costs involved with adoption. These programs assure families that they will be able to afford adoption but also to provide their adopted child opportunities which they did not have before. Many of these programs’ futures are uncertain but organizations like VFA are here to remind leaders that these adoption incentives and benefits make families whole and help heal the important 112,000 members of the next generation.  


Image Provided by http://valleyparentmagazine.com/is-adoption-right-for-you/