What is the Indiana Adoption Tax Credit?

Indiana Adoption Tax CreditAt his State of the State address earlier this week, Governor Mike Pence proposed legislation that would offset the cost of adoption by creating an Indiana Adoption Tax Credit. The legislation advanced within the Family, Children and Human Affairs Committee and will likely move onto the House Ways and Means committee next. Should the legislation be approved, Indiana families completing an adoption could receive a tax credit up to $1,297 for the tax year in which their adoption is finalized.
Unfortunately, cost is often a major obstacle to families choosing to build their families through adoption. Any Indiana adoptive parents eligible for the federal tax credit would also be eligible for the proposed state credit. The proposed Indiana adoption tax credit would be 10% of the amount the family qualified for under the federal adoption tax credit. Therefore the value would be $0-$1,297 depending upon the family’s income.
The federal adoption tax credit has helped thousands of American families offset the high cost of adoption since the credit was established in 1997. The credit has made adoption a more viable option for many parents who might not otherwise have been able to afford adoption, allowing them to provide children with loving, permanent families.
According to the IRS, qualified adoption expenses include adoption fees, attorney fees, court costs, travel expenses while away from home, and the re-adoption expenses relating to the adoption of a child through international adoption. Qualified adoption expenses do not include fees associated with a surrogate parenting arrangement, a step-parent adoption or expenses that have been paid or reimbursed by employers.
According to the National Conference of State Legislatures, Indiana would join 13 other states in offering an adoption tax credit. The cost of the adoption tax credit to the state of Indiana would be overwhelmingly outweighed by the financial benefits that occur when a child is removed from foster care and placed in a loving, permanent home. A child that is a ward of the state can cost the state $1,000 each month in care and benefits. However, if adopted, that financial obligation is transferred to the adoptive family. The state not only experiences significant financial savings in the care of the child, but a child who is adopted is more likely to pursue her education and contribute more significantly to the state’s economy in the future.
The staff of MLJ Adoptions is committed to serving children in need and we share Governor Pence’s belief that cost should not be an obstacle to families with the desire to offer a child a loving, permanent home. It was my honor to testify on behalf of the Indiana Adoption Tax Credit this week and it was gratifying to see the tremendous support for adoption from the committee members and the Chairman and Sponsor of the bill, Representative Rebecca Kubacki. I want to thank Governor Pence and Representative Kubacki for their efforts to make adoption more affordable in the state of Indiana. My staff and I pledge to continue our advocacy at both the state and national level to make building families through adoption a more affordable and less onerous process.
Photo Credit: AgrilLife TodayFor more information about MLJ Adoptions’ international adoption programs, please click here.

Michele L. Jackson, JD taught the Hague Convention for five years as an adjunct professor at IU School of Law – Indianapolis in an advanced international family law course, She is the founder of MLJ Adoptions and frequent presenter on international adoption process, law and other related issues.