26 U.S.C. § 23
In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer.
The credit under paragraph (1) with respect to any expense shall be allowed-
In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years.
The aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000.
The amount allowable as a credit under subsection (a) for any taxable year (determined without regard to subsection (c)) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph but with regard to paragraph (1)) as-
For purposes of subparagraph (A), adjusted gross income shall be determined without regard to sections 911, 931, and 933.
No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter.
No credit shall be allowed under subsection (a) for any expense to the extent that funds for such expense are received under any Federal, State, or local program.
If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section and section 25D), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.
No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.
For purposes of this section-
The term "qualified adoption expenses" means reasonable and necessary adoption fees, court costs, attorney fees, and other expenses-
The term "eligible child" means any individual who-
The term "child with special needs" means any child if-
In the case of an adoption of a child who is not a citizen or resident of the United States (as defined in section 217(h)(3))-
Rules similar to the rules of paragraphs (2), (3), and (4) of section 21(e) shall apply for purposes of this section.
No credit shall be allowed under this section with respect to any eligible child unless the taxpayer includes (if known) the name, age, and TIN of such child on the return of tax for the taxable year.
The Secretary may, in lieu of the information referred to in subparagraph (A), require other information meeting the purposes of subparagraph (A), including identification of an agent assisting with the adoption.
For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in subsection (a)(3) and paragraphs (1) and (2)(A)(i) of subsection (b) shall be increased by an amount equal to-
If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.
The Secretary shall prescribe such regulations as may be appropriate to carry out this section and section 137, including regulations which treat unmarried individuals who pay or incur qualified adoption expenses with respect to the same child as 1 taxpayer for purposes of applying the dollar amounts in subsections (a)(3) and (b)(1) of this section and in section 137(b)(1).
26 U.S.C. § 23
Inflation Adjusted Items for Certain YearsFor inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.
EDITORIAL NOTES
PRIOR PROVISIONSA prior section 23, added Pub. L. 95-618, title I, §101(a), Nov. 9, 1978, 92 Stat. 3175, §44C; amended Pub. L. 96-223, title II, §§201, 202(a)-(d), 203(a), Apr. 2, 1980, 94 Stat. 256, 258; renumbered §23 and amended Pub. L. 98-369, div. A, title IV, §§471(c), 474(e), title VI, §612(e)(2), July 18, 1984, 98 Stat. 826, 831, 912, related to residential energy credit, prior to repeal by Pub. L. 101-508, §11801(a)(1), Nov. 5, 1990, 104 Stat. 1388-520.
AMENDMENTS2018-Subsec. (c)(1). Pub. L. 115-141 substituted "section 25D" for "sections 25D and 1400C".2017-Subsec. (h)(2). Pub. L. 115-97 substituted "for 'calendar year 2016' in subparagraph (A)(ii)" for "for 'calendar year 1992' in subparagraph (B)". 2013-Subsec. (b)(4). Pub. L. 112-240, §104(c)(2)(A)(i), struck out par. (4). Prior to amendment, text read as follows: "In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of-"(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over"(B) the sum of the credits allowable under this subpart (other than this section and section 25D) and section 27 for the taxable year."Subsec. (c). Pub. L. 112-240, §104(c)(2)(A) (ii), (iii), added par. (1), redesignated par. (3) as (2), and struck out former pars. (1) and (2) which related to rule for years in which all personal credits allowed against regular and alternative minimum tax and rule for other years, respectively.2010-Subsec. (a)(3). Pub. L. 111-148, §10909(a)(1)(B), (c), as amended by Pub. L. 111-312, temporarily substituted "$13,170" for "$10,000" in heading and text. See Effective and Termination Dates of 2010 Amendment note below.Subsec. (b)(1). Pub. L. 111-148, §10909(a)(1)(A), (c), as amended by Pub. L. 111-312, temporarily substituted "$13,170" for "$10,000". See Effective and Termination Dates of 2010 Amendment note below.Subsec. (b)(4). Pub. L. 111-148, §10909(b)(2)(I)(i), (c), as amended by Pub. L. 111-312, temporarily struck out par. (4). Text read as follows: "In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of-"(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over"(B) the sum of the credits allowable under this subpart (other than this section and section 25D) and section 27 for the taxable year."See Effective and Termination Dates of 2010 Amendment note below. Subsec. (c). Pub. L. 111-148, §10909(b)(2)(I) (ii), (c), as amended by Pub. L. 111-312, temporarily struck out subsec. (c) which related to carryforwards of unused credit. See Effective and Termination Dates of 2010 Amendment note below.Subsec. (h). Pub. L. 111-148, §10909(a)(1)(C), (c), as amended by Pub. L. 111-312, temporarily amended subsec. (h) generally. Prior to amendment, subsec. (h) related to adjustments for inflation. See Effective and Termination Dates of 2010 Amendment note below.2008-Subsec. (b)(4)(B). Pub. L. 110-343 inserted "and section 25D" after "this section". 2005-Subsec. (b)(4). Pub. L. 109-135, §402(i)(3)(A)(i), substituted "In the case of a taxable year to which section 26(a)(2) does not apply, the credit" for "The credit" in introductory provisions.Subsec. (c). Pub. L. 109-135, §402(i)(3)(A) (ii), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: "If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by subsection (b)(4) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year. No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis." Pub. L. 109-58, §1335(b)(1), which directed amendment of subsec. (c) by substituting "this section, section 25D, and section 1400C" for "this section and section 1400C", was repealed by Pub. L. 109-135, §402(i)(4) . See Effective and Termination Dates of 2005 Amendment notes below. 2002-Subsec. (a)(1). Pub. L. 107-147, §411(c)(1)(A), reenacted heading without change and amended text of par. (1) generally. Prior to amendment, text read as follows: "In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter- "(A) in the case of an adoption of a child other than a child with special needs, the amount of the qualified adoption expenses paid or incurred by the taxpayer, and"(B) in the case of an adoption of a child with special needs, $10,000."Subsec. (a)(2). Pub. L. 107-147, §411(c)(1)(C), struck out concluding provisions which read as follows: "In the case of the adoption of a child with special needs, the credit allowed under paragraph (1) shall be allowed for the taxable year in which the adoption becomes final."Subsec. (a)(3). Pub. L. 107-147, §411(c)(1)(B), added par. (3).Subsec. (b)(1). Pub. L. 107-147, §411(c)(1)(D), substituted "subsection (a)" for "subsection (a)(1)(A)".Subsec. (h). Pub. L. 107-147, §418(a)(1), substituted "subsection (a)(3)" for "subsection (a)(1)(B)" in introductory provisions and inserted concluding provisions.Subsec. (i). Pub. L. 107-147, §411(c)(1)(E), substituted "the dollar amounts in subsections (a)(3) and (b)(1)" for "the dollar limitation in subsection (b)(1)".2001-Subsec. (a)(1). Pub. L. 107-16, §202(a)(1), amended heading and text of par. (1) generally. Prior to amendment, text read as follows: "In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer." Subsec. (a)(2). Pub. L. 107-16, §202(c), inserted concluding provisions.Subsec. (b)(1). Pub. L. 107-16, §202(b)(1)(A), substituted "subsection (a)(1)(A)" for "subsection (a)" and "$10,000" for "$5,000" and struck out "($6,000, in the case of a child with special needs)" before period at end.Subsec. (b)(2)(A)(i). Pub. L. 107-16, §202(b)(2)(A), substituted "$150,000" for "$75,000".Subsec. (b)(4). Pub. L. 107-16, §202(f)(1), added par. (4).Subsec. (c). Pub. L. 107-16, §202(f)(2)(A), substituted "subsection (b)(4)" for "section 26(a)" and struck out "reduced by the sum of the credits allowable under this subpart (other than this section and sections 24 and 1400C)" before ", such excess". Pub. L. 107-16, §201(b)(2)(E), substituted "and sections 24 and 1400C" for "and section 1400C".Subsec. (d)(2). Pub. L. 107-16, §202(d)(1), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: "The term 'eligible child' means any individual-"(A) who-"(i) has not attained age 18, or"(ii) is physically or mentally incapable of caring for himself, and"(B) in the case of qualified adoption expenses paid or incurred after December 31, 2001, who is a child with special needs."Subsecs. (h), (i). Pub. L. 107-16, §202(e)(1), added subsec. (h) and redesignated former subsec. (h) as (i).1998-Subsec. (b)(2)(A). Pub. L. 105-206, §6018(f)(1), inserted "(determined without regard to subsection (c))" after "for any taxable year" in introductory provisions. Subsec. (c). Pub. L. 105-206, §6008(d)(6), inserted "and section 1400C" after "other than this section". 1997-Subsec. (a)(2). Pub. L. 105-34, §1601(h)(2)(A), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: "The credit under paragraph (1) with respect to any expense shall be allowed-"(A) for the taxable year following the taxable year during which such expense is paid or incurred, or"(B) in the case of an expense which is paid or incurred during the taxable year in which the adoption becomes final, for such taxable year." Subsec. (b)(2)(B). Pub. L. 105-34, §1601(h)(2)(B), substituted "determined without regard to sections 911, 931, and 933." for "determined-"(i) without regard to sections 911, 931, and 933, and"(ii) after the application of sections 86, 135, 137, 219, and 469."
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115-97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115-97, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 2013 AMENDMENT Pub. L. 112-240, §104(d), Jan. 2, 2013, 126 Stat. 2323, provided that: "The amendments made by this section [amending this section and sections 24, 25, 25A, 25B, 25D, 26, 30, 30B, 30D, 55, 904, and 1400C of this title] shall apply to taxable years beginning after December 31, 2011."
EFFECTIVE AND TERMINATION DATES OF 2010 AMENDMENTAmendment by Pub. L. 111-148 terminated applicable to taxable years beginning after Dec. 31, 2011, and section is amended to read as if such amendment had never been enacted, see section 10909(c) of Pub. L. 111-148, set out as a note under section 1 of this title. Amendment by Pub. L. 111-148 applicable to taxable years beginning after Dec. 31, 2009, see section 10909(d) of Pub. L. 111-148, set out as a note under section 1 of this title.
EFFECTIVE AND TERMINATION DATES OF 2008 AMENDMENT Pub. L. 110-343, div. B, title I, §106(f), Oct. 3, 2008, 122 Stat. 3817, provided that:"(1) IN GENERAL.-Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 24, 25B, 25D, 26, and 45 of this title] shall apply to taxable years beginning after December 31, 2007."(2) SOLAR ELECTRIC PROPERTY LIMITATION.-The amendments made by subsection (b) [amending section 25D of this title] shall apply to taxable years beginning after December 31, 2008."(3) APPLICATION OF EGTRRA SUNSET.-The amendments made by subparagraphs (A) and (B) of subsection (e)(2) [amending this section and section 24 of this title] shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, §901, which was repealed by Pub. L. 112-240, §101(a)(1), Jan. 2, 2013, 126 Stat. 2315, was formerly set out as an Effective and Termination Dates of 2001 Amendment note under section 1 of this title] in the same manner as the provisions of such Act to which such amendments relate."
EFFECTIVE AND TERMINATION DATES OF 2005 AMENDMENT Pub. L. 109-135, §402(i)(3)(H), Dec. 21, 2005, 119 Stat. 2615, provided that: "The amendments made by this paragraph [amending this section and sections 24, 25, 25B, 25D, 904, and 1400C of this title] (and each part thereof) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, §901, which was repealed by Pub. L. 112-240, §101(a)(1), Jan. 2, 2013, 126 Stat. 2315, was formerly set out as an Effective and Termination Dates of 2001 Amendment note under section 1 of this title] in the same manner as the provisions of such Act to which such amendment (or part thereof) relates." Pub. L. 109-135, §402(i)(4), Dec. 21, 2005, 119 Stat. 2615, struck out Pub. L. 109-58, §1335(b)(1) -(3), and provided in part that: "The Internal Revenue Code of 1986 shall be applied and administered as if the amendments made [by] such paragraphs [amending this section and sections 25 and 1400C of this title] had never been enacted." Pub. L. 109-135, §402(m), Dec. 21, 2005, 119 Stat. 2615, provided that:"(1) IN GENERAL.-Except as provided in paragraphs (2) and (3), the amendments made by this section [see Tables for classification] shall take effect as if included in the provisions of the Energy Policy Act of 2005 [Pub. L. 109-58] to which they relate."(2) REPEAL OF PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.-The amendments made by subsection (a) [amending sections 121, 246, 247, 1223, 1245, and 1250 of this title and repealing sections 1081 to 1083 of this title] shall not apply with respect to any transaction ordered in compliance with the Public Utility Holding Company Act of 1935 [15 U.S.C. 79 et seq.] before its repeal."(3) COORDINATION OF PERSONAL CREDITS.-The amendments made by subsection (i)(3) [amending this section and sections 24, 25, 25B, 25D, 904, and 1400C of this title] shall apply to taxable years beginning after December 31, 2005." Pub. L. 109-58, §1335(c), Aug. 8, 2005, 119 Stat. 1036, provided that: "The amendments made by this section [enacting section 25D of this title and amending this section and sections 25, 1016, and 1400C of this title] shall apply to property placed in service after December 31, 2005, in taxable years ending after such date."
EFFECTIVE DATE OF 2002 AMENDMENT Pub. L. 107-147, §411(c)(3), Mar. 9, 2002, 116 Stat. 46, provided that: "The amendments made by this subsection [amending this section and section 137 of this title] shall apply to taxable years beginning after December 31, 2002; except that the amendments made by paragraphs (1)(C), (1)(D) [amending this section], and (2)(B) [amending section 137 of this title] shall apply to taxable years beginning after December 31, 2001." Amendment by section 418(a)(1) of Pub. L. 107-147 effective as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107-16, to which such amendment relates, see section 418(c) of Pub. L. 107-147, set out as a note under section 21 of this title.
EFFECTIVE DATE OF 2001 AMENDMENT Pub. L. 108-311, §312(b)(2), Oct. 4, 2004, 118 Stat. 1181, provided that: "The amendments made by sections 201(b), 202(f), and 618(b) of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, amending this section and sections 24, 25, 25B, 26, 904, and 1400C of this title] shall not apply to taxable years beginning during 2004 or 2005." Pub. L. 107-147, §601(b)(2), Mar. 9, 2002, 116 Stat. 59, provided that: "The amendments made by sections 201(b), 202(f), and 618(b) of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, amending this section and sections 24, 25, 25B, 26, 904, and 1400C of this title] shall not apply to taxable years beginning during 2002 and 2003."Amendment by section 201(b)(2)(E) of Pub. L. 107-16 applicable to taxable years beginning after Dec. 31, 2001, see section 201(e)(2) of Pub. L. 107-16, set out as a note under section 24 of this title. Pub. L. 107-16, §202(g), June 7, 2001, 115 Stat. 49, provided that:"(1) IN GENERAL.-Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 24, 26, 137, 904, and 1400C of this title] shall apply to taxable years beginning after December 31, 2001."(2) SUBSECTION (a).-The amendments made by subsection (a) [amending this section and section 137 of this title] shall apply to taxable years beginning after December 31, 2002."
EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105-206, §6018(h), July 22, 1998, 112 Stat. 823, provided that: "The amendments made by this section [amending this section and sections 219, 408, 414, and 679 of this title and amending provisions set out as notes under sections 167 and 4091 of this title] shall take effect as if included in the provisions of the Small Business Job Protection Act of 1996 [Pub. L. 104-188] to which they relate."Amendment by section 6008(d)(6) of Pub. L. 105-206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105-34, to which such amendment relates, see section 6024 of Pub. L. 105-206, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105-34, §1601(j), Aug. 5, 1997, 111 Stat. 1093, provided that:"(1) IN GENERAL.-Except as provided in paragraph (2), the amendments made by this section [amending this section, sections 30A, 52, 55, 137, 401, 403, 404, 408, 414, 512, 529, 593, 641, 679, 860L, 956, 1361, 1374, 4001, 4041, 4092, 4261, 6039D, 6048, 6050R, 6501, 6693, 7701, and 9503 of this title, section 1055 of Title 29, Labor, and provisions set out as notes under sections 529 and 4091 of this title] shall take effect as if included in the provisions of the Small Business Job Protection Act of 1996 [Pub. L. 104-188] to which they relate."(2) CERTAIN ADMINISTRATIVE REQUIREMENTS WITH RESPECT TO CERTAIN PENSION PLANS.-The amendment made by subsection (d)(2)(D) [amending section 401 of this title] shall apply to calendar years beginning after the date of the enactment of this Act [Aug. 5, 1997]."
EFFECTIVE DATE Pub. L. 104-188, §1807(e), Aug. 20, 1996, 110 Stat. 1903, provided that: "The amendments made by this section [enacting this section and section 137 of this title, renumbering former section 137 of this title as section 138, and amending sections 25, 86, 135, 219, 469, and 1016 of this title] shall apply to taxable years beginning after December 31, 1996."
SAVINGS PROVISIONAmendment by Pub. L. 115-141 not applicable to certain obligations issued, DC Zone assets acquired, or principal residences acquired before Jan. 1, 2012, see section 401(d)(4)(C) of Pub. L. 115-141, set out as a note under former section 1400 of this title. Pub. L. 115-141, div. U, title IV, §401(e), Mar. 23, 2018, 132 Stat. 1212, provided that: "If-"(1) any provision amended or repealed by the amendments made by subsection (b) or (d) [see Tables for classification] applied to-"(A) any transaction occurring before the date of the enactment of this Act [Mar. 23, 2018],"(B) any property acquired before such date of enactment, or"(C) any item of income, loss, deduction, or credit taken into account before such date of enactment, and "(2) the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by such subsection) affect the liability for tax for periods ending after such date of enactment,nothing in the amendments or repeals made by this section [see Tables for classification] shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment."
EXPENSES PAID OR INCURRED BEFORE 2002 Pub. L. 107-147, §411(c)(1)(F), Mar. 9, 2002, 116 Stat. 45, provided that: "Expenses paid or incurred during any taxable year beginning before January 1, 2002, may be taken into account in determining the credit under section 23 of the Internal Revenue Code of 1986 only to the extent the aggregate of such expenses does not exceed the applicable limitation under section 23(b)(1) of such Code as in effect on the day before the date of the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 [June 7, 2001]."
TAX CREDIT AND GROSS INCOME EXCLUSION STUDY AND REPORT Pub. L. 104-188, §1807(d), Aug. 20, 1996, 110 Stat. 1903, provided that: "The Secretary of the Treasury shall study the effect on adoptions of the tax credit and gross income exclusion established by the amendments made by this section [enacting this section and section 137 of this title, renumbering former section 137 of this title as section 138, and amending sections 25, 86, 135, 219, 469, and 1016 of this title] and shall submit a report regarding the study to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives not later than January 1, 2000."
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- Secretary of the Treasury
- The term "Secretary of the Treasury" means the Secretary of the Treasury, personally, and shall not include any delegate of his.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- State
- The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
- TIN
- The term "TIN" means the identifying number assigned to a person under section 6109.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- taxpayer
- The term "taxpayer" means any person subject to any internal revenue tax.
- transaction
- The term "transaction" includes a series of transactions.