Baby Steps in Tax Policy: Impacts of the Federal Adoption Tax Credit

• In Event: Family Support in the Tax Code

Abstract

The federal adoption tax credit is among the largest credits claimable by an individual filer in the US and is one of the primary tools used to facilitate child adoption. A temporary reform in 2010 and 2011 made the credit fully refundable, affording the opportunity to trace the heterogeneous adoption response of taxpayers across the distribution of tax liability. The estimates imply increasing access to the credit was effective at encouraging child adoption, inducing an additional 36,188 adoptions among those impacted by reform and that the average fiscal cost of encouraging an additional adoption ranges between $15,500 and $17,500.

Author

• Chandler Inman, University of Michigan