Page 200 - JoFA_2022

TAX / PERSONAL FINANCIAL PLANNING

State tax benefits for adoption

Carryforward
State Tax benefit Maximum amount Type of credit
allowed
Credit and $1,000 per qualifying child. A subtraction from income is also permitted for
Alabama Refundable n/a
deduction reasonable medical and legal adoption expenses paid.
Arizona Deduction Lesser of qualified adoption expenses or $3,000. n/a n/a

Arkansas Credit 20% of the amount allowed on federal return. Nonrefundable No
California Credit Lesser of $2,500 or 50% of adoption costs incurred. Nonrefundable Yes

$6,000 per qualified foster child adopted, per tax year, beginning in year
Georgia Credit adoption becomes final, for five taxable years; $2,000 per tax year thereafter, Nonrefundable Yes
ending in the year when the adopted child attains the age of 18.
Idaho Deduction $10,000 of legal and medical expenses for successful adoptions.

Indiana Credit Lesser of 10% of the federal credit or $1,000 per child. Refundable n/a

Credit for the first $5,000 of unreimbursed expenses per adoption, per child. An
Iowa Deduction itemized deduction is also available for qualifying adoption expenses exceeding Refundable n/a
3% of total Iowa net income, less any adoption credit claimed.
25% percent of the credit allowed on taxpayer’s federal return. Additional 25% if
Kansas Credit the child was a Kansas resident prior to adoption. Additional 25% if a child with Nonrefundable Yes
special needs.

$6,000 ($5,000) if child is a resident of Maryland at the time of adoption and is (is
Maryland Deduction not) a special needs child. If child is not a resident of Maryland, $3,000 ($2,000) if n/a n/a
child is (is not) special needs.

Massachusetts Deduction Amount of fees paid to a licensed adoption agency during the tax year. n/a n/a
Mississippi Credit $5,000 through Dec. 31, 2023 (increased from $2,500.) Nonrefundable Yes
Lesser of qualified adoption expenses not reimbursed by federal, state, or local
Missouri Credit Nonrefundable n/a
programs or $10,000 for a child defined as “special needs.”
Greater of $1,500 or adoption-related expenses (up to $10,000) per child.
Ohio Credit Nonrefundable Yes
Expenses do not have to be incurred in same year.
Oklahoma Deduction $20,000 nonrecurring expenses per calendar year. n/a n/a
New Mexico Credit $1,000 per year for a child defined as “special needs.” Refundable n/a

South Carolina Deduction $2,000 per year for child defined as “special needs.” n/a n/a
Utah Credit $1,000 per year for a child defined as “special needs.” Refundable n/a
West Virginia Credit $4,000 per qualifying child. Refundable n/a

Wisconsin Deduction $5,000 per qualifying child. n/a n/a

Source: Kaitlin Newkirk, David Randolph, and Cam Cockrell. Data from states’ tax materials.

30 | Journal of Accountancy May 2022