QUESTION: An employee has asked us to consider adding an adoption assistance benefit. There is also a tax credit for adoption expenses, so, as a small company with a tight benefits budget, would it make sense for us to offer an adoption assistance plan of our own?
ANSWER: The Code does have a generous tax credit for qualified adoption expenses. For 2026, the maximum credit is $17,670 per child—the same as the maximum nontaxable reimbursement by an employer’s qualified adoption assistance program—and a portion of the tax credit is refundable (up to $5,120 in 2026). If an employer has an adoption assistance benefit, employees can choose whether to take the federal tax credit for a qualified expense or submit that expense to the employer-provided program for reimbursement.
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