April 24, 2024

The Fry Times

House passes Adoption Tax Credit increase

This week the House passed House File 351—a bill that increases Iowa’s current adoption tax credit. Currently, the adoption tax credit equals the amount of qualified adoption expenses paid or incurred by the taxpayer in connection with the adoption of a child, not to exceed $5,000 per adoption.

House File 351 phases in an increase to the maximum amount of the adoption tax credit over two years. For next year, the bill increases the tax credit to $7,500 per adoption. For 2025, it is further increased to $10,000 per adoption.

A simple internet search will reveal that private infant adoptions come at a cost of roughly $35,000. International adoptions cost even more and foster adoptions cost less. Of course, the legal complexity of the particular adoption may increase costs.

The increase to the tax credit is estimated to reduce the state general fund $406,000 in FY 2025 and $775,000 for FY 2026 and after. House File 351 will now go to the Senate for consideration.