The Internal Revenue Service (IRS) has revised its interpretation of the adoption tax credit, allowing families to access a refundable portion of the credit for previous years. This change comes after concerns were raised about how the IRS handled carryforward amounts under the Working Families Tax Cuts.
Previously, adoptive families who filed taxes between 2020 and 2024 could not claim refundability on carryforward amounts, which limited their ability to benefit from the adoption tax credit. U.S. Senator Kevin Cramer (R-ND) addressed this issue by questioning Secretary Bessent during a Senate Banking, Housing, and Urban Affairs Committee hearing.
During a House Ways & Means Committee hearing, the IRS announced its new 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,” an IRS representative said. “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.”
Senator Cramer welcomed the decision: “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.”
Cramer has advocated for increased support for adoptive children and families for more than ten years. As an adoptive father himself, he has worked to restore refundability to this tax credit. The adoption tax credit was only briefly refundable in 2010 and 2011 before partial refundability was included in last summer’s Working Families Tax Cuts legislation at Cramer’s urging.
With these changes, up to $5,000 of a $17,280 adoption tax credit can now be refunded as a cash payment for families with no federal income tax liability; unused funds may offset future liabilities or be carried forward up to five years.
According to his official website, Senator Cramer represents North Dakota in the U.S. Senate under federal government authority and maintains offices both in North Dakota and Washington D.C. He also offers constituent services such as assistance with federal agencies and citizen outreach while facilitating public engagement through his office’s services and information channels. Cramer holds degrees from Concordia College and University of Mary and serves on several committees including emphasizing national defense through his role on the Senate Armed Services Committee.
