Cramer Secures Change to Adoption Tax Credit Carryforward

***Click here for video. Click here for audio***

WASHINGTON, D.C. - In a victory for adoptive families across the nation, the Internal Revenue Service (IRS) corrected its interpretation of the partially refundable adoption tax credit included in recently-implemented Working Families Tax Cuts.

Previously, the IRS interpreted the law to conclude the carryforward was not eligible for refundability, affecting adoptive families who filed taxes from 2020-2024. The resulting interpretation prevented those families from accessing part of the credit. U.S. Senator Kevin Cramer (R-ND) questioned Secretary Bessent about this interpretation at a Senate Banking, Housing, and Urban Affairs Committee hearing.

During a hearing today in the House Ways & Means Committee, IRS announced the change in policy. "After reviewing this issue, I am pleased to announce that for tax year 2025, carryforward amounts of the adoption tax credit for prior years are refundable up to $5000 per qualifying child and the IRS is implementing this policy as expeditiously as possible without disrupting the current filing season," said Frank Bisignano, the CEO of the IRS. "The IRS will publish additional information on this very soon. Taxpayers should continue to claim the credit as directed by the current forms and instructions during tax season, since the IRS is pursuing post-filing remedies to resolve this issue."

Cramer celebrated the IRS revision, saying "I'm grateful to Secretary Bessent and his team for making this important fix. Restoring the carryforward will help adoptive families access the refundable portion of the adoption tax credit like we intended when we actually passed it as part of the Working Families Tax Cuts."

For over a decade, Cramer has been on a mission to increase support for adoptive children and families. As an adoptive father himself, Cramer has long advocated to restore refundability to the adoption tax credit. The credit was briefly refundable in 2010 and 2011, and Cramer secured inclusion of partial refundability in the Working Families Tax Cuts legislation, which passed last summer. Cramer's efforts will allow up to $5,000 of the $17,280 credit to be refundable as a cash payment for families with no tax liability and allow unused funds to offset tax liability and carryforward for up to five years.