The U.S. Department of the Treasury announced that it will expedite the consultation process to facilitate an enhanced adoption tax credit for 2025 Tribal adoptions. The Treasury will hold a virtual consultation session on September 15th at 1:00 pm EST.
The One Big Beautiful Bill (OBBB, P.L. 119-21), passed on July 4th, incorporated the expansion of the adoption tax credit. This provision was initially included in the Tribal Tax and Investment Reform Act of 2025 (S.2022), introduced in June by Senators Cortez Masto (D-NV) and Murkowski (R-AK), before its inclusion in both House and Senate versions of the One Big Beautiful Bill.
OBBB added Section 70403, recognizing Indian Tribal government determinations of special needs in parity with state determinations. If a Tribal government makes certain determinations regarding a child’s eligibility, Tribal adoptive families will have access to the enhanced adoption tax credit and this significant financial support.
The Dear Tribal Leader letter from the Treasury provides two examples of how Tribal families will benefit from adoption tax credit changes: Taxpayer C, who adopts through Tribal Court in 2025 with a special needs determination from a Tribal child welfare agency, is eligible for the full $17,280 adoption tax credit for 2025, while if Taxpayer C has no tax liability but still has a valid, finalized 2025 tribal adoption with a special needs determination, they may claim a $5,000 refundable credit portion for tax year 2025.
The adoption tax credit provides a non-refundable tax credit to offset the costs of adopting a child. Specifically, an individual could file for a tax credit for qualified adoption expenses paid or incurred in connection with the adoption of an eligible child. For 2025, this tax credit could be claimed for up to $17,280 in qualified adoption expenses. The OBBB added Section 70402, which enhances the adoption tax credit. Specifically, this provision makes the adoption tax credit partially refundable up to $5,000 (indexed for inflation) for tax years that begin in 2025. Before this amendment, taxpayers could only benefit from this credit to the extent that they had a tax liability to offset.
In addition to the September 15th consultation, Treasury accepts written comments until Thursday, October 10, 2025, 11:59 p.m. Alaska Time. You can submit written comments at tribal.consult@treasury.gov.
