Adoption Tax Credit Refundability Act of 2025

This bill, titled the "Adoption Tax Credit Refundability Act of 2025," significantly modifies the federal adoption tax credit. Its primary purpose is to make the credit refundable , meaning that eligible families can receive the full amount of the credit as a refund, even if it exceeds their total tax liability. This change aims to provide greater financial assistance to families adopting children. To achieve refundability, the bill renumbers the existing adoption credit from Section 23 to Section 36C and relocates it within the Internal Revenue Code to the subpart designated for refundable credits. It also introduces a new provision allowing for the development of standardized third-party affidavits to verify legal adoptions, including those involving children with special needs. These affidavits are intended to streamline the verification process for the credit. The amendments made by this bill will take effect for taxable years beginning after December 31, 2025 . Additionally, the legislation includes a transitional rule to ensure that any unused adoption credit carryforwards from prior years will be treated as part of the new refundable credit in the first applicable taxable year.