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House Approves Permanent Adoption Tax Credit

On June 7, the House easily approved, 391-1, legislation (H.R. 4800) that would make permanent the expansion of the adoption tax credit included in last year’s tax law (P.L. 107-16). Rep. Charles Stenholm (D-TX) cast the only negative vote.

Under current law, families who adopt a special-needs child are guaranteed a tax credit of $10,000, up from the $6,000 allowed in previous law. For all other children, adoptive families are eligible for a tax credit of up to $10,000, double the $5,000 limit previously allowed. Present law also provides an exclusion of up to $10,000 from the gross income of an employee for qualified adoption expenses paid by an employer. Families earning $150,000 or less qualify for the full adoption credits.

All of the provisions in last year’s tax cut package, including the expansion of the adoption credit and the exclusion for adoption assistance, are set to expire after December 31, 2010. H.R. 4800 would repeal the sunset for the adoption provisions, making them permanent.

Rep. Dave Camp (R-MI), sponsor of the measure, pointed out that adoption can be very costly. “After paying legal fees, doctor bills and travel expenses, a family can easily incur expenses of up to $20,000 or even more,” he said. “Over half a million children are counting on us to finish the job we started over a year ago,” he added.

Rep. Carolyn Maloney (D-NY) agreed. “Too many potential parents resist adopting because of this substantial economic burden,” she said, and added, “It is imperative that we take additional steps to relieve this financial weight on these families.”

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