Treasury, IRS issue FAQs about general refundability and recognizing Indian tribal governments for purposes of making a special needs determination for the Adoption Tax Credit

IR-2026-27, Feb. 27, 2026

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued frequently asked questions on FS-2026-03 related to general refundability and recognizing Indian tribal governments for purposes of making a special needs determination for the Adoption Tax Credit.

The One, Big, Beautiful Bill made two principal changes to the adoption tax credit:

• Making the adoption tax credit refundable up to $5,000 (indexed for inflation). The nonrefundable portion of the credit can be carried forward for a maximum of 5 (five) years; however, it cannot result in a refund. Any remaining nonrefundable portion after 5 (five) years is forfeited.
• Providing parity for Indian tribal governments so that state government and Indian tribal government determinations of special needs are both recognized for purposes of the adoption tax credit.

These changes apply to tax years beginning after 2024.

For more information, see Adoption Expenses on IRS.gov.