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How to pay for adoption

Adoption is a wonderful chance to grow your family and a life-changing event for both the parents and children involved. However, as you may know, adoption can seem prohibitively expensive. The costs add up and you may find yourself wondering how you’ll afford it. Luckily, there are many programs available to help you handle the expenses—from adoption fees to ongoing children’s health care—so you can focus on what really matters.

Affording adoption fees

There’re many options to consider if you’re looking for ways to help offset the cost of your child’s adoption. 

Grants. Several nonprofit and faith-based organizations offer grants to help fund adoptions. With a grant, there’s no interest or requirement to pay back the money you’re given if your application is accepted. Grants help you pay for your adoption expenses with very little financial risk involved. 

Fundraising. Another way to raise money for your adoption without needing to worry about paying it back. You can share a link to a fundraising site on social media if your friends, family, and community are open to helping you with the adoption process. If you’re a member of a religious institution, they may offer to help as well. You could also consider things like garage sales or selling items on auction sites to raise more cash. 

Loans. A loan from your workplace savings plan, a personal loan, a home equity loan, or refinancing a mortgage could all be ways to help pay the fees. If your employer offers adoption assistance or reimbursement, taking a loan to cover upfront costs might make sense. If you’re planning to take a loan, make sure you pay attention to the interest and fees that come with it to make sure you choose one that works with your finances. 

Also know, some adoption agencies offer a sliding scale for their fees, which could help make adoption more affordable.

Tax credits for adoption

When you pay qualified adoption expenses, you might be able to claim the Adoption Tax Credit. Reasonable and necessary adoption fees, court and attorney fees, travel expenses, and other directly related costs are all qualified expenses, and you might be able to claim them dollar for dollar on your tax return to save on what you owe the IRS.

Adoption Assistance Exclusion and Adoption Credit. The maximum amount that may be excluded from an employee’s gross income under an employer-provided adoption assistance program for the adoption of a child will be $15,950 for 2023 (up from $14,890). In addition, the maximum adoption credit allowed to an individual for the adoption of a child will be $15,950 for 2023 (up from $14,890). Both the exclusion and the credit will begin to be phased out for individuals with modified adjusted gross incomes greater than $239,230 and will be entirely phased out for individuals with modified adjusted gross incomes of $279,230 or more.1 Consult an attorney or tax professional about your specific situation.

You’ll also want to remember that any money you get from an employer-provided adoption assistance program might be excluded from your gross income for tax purposes, but it will still be counted against the tax credit. That means that if your employer reimburses you for $10,000 worth of expenses, the tax credit you could potentially claim would go down from $14,080 to $4,080. 

If the tax credit you can get is more than what you owe in taxes that year, you could possibly carry it forward into the next year and use it then. If eligible, you can carry the tax credit forward for up to 5 years. 

If you’re adopting a child with special needs or disabilities, you might qualify for the entire credit, even if you didn’t have any expenses. 

To learn more about the Adoption Tax Credit and the other special situations it covers, go to or talk to your tax professional who can help you determine what’ll be most helpful for you.

Other adoption assistance and health care

If you’re adopting from foster care, your child may be eligible for adoption assistance. Each state has its own adoption assistance program, and the program your child is eligible for will be based on the state they’re adopted from. Find out more about adoption assistance on the Child Welfare Information Gateway and learn how these state sponsored programs are used to help new parents afford the costs of raising children from foster care.2 

Also know, if you’re adopting a child from foster care they’re covered by Medicaid.3 Title IV-E supports care for children who’ve been removed from their homes and can cover them up to age 21 if they’re eligible. They might be able to keep that coverage after adoption, either through title IV-E or other methods, so be sure to explore these options when deciding what to do about your child’s health care.

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1. William Ruane, “Rev. Proc. 2022-38,” IRS, 2023, 2. Child Welfare Information Gateway connects professionals and the general public to timely, essential information and resources targeted to the safety, permanency, and well-being of children and families. All content on the Information Gateway website is in the public domain, which means that this material may be freely reproduced and distributed. 3. “Health-Care Coverage for Children and Youth in Foster Care—and After,” Child Welfare Information Gateway, January 2022,

This information is general in nature and provided for educational purposes only.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.