Families seeking to adopt would continue to receive a tax credit to help partially cover the expenses of expanding their families under legislation introduced by Nebraska’s Senator Ben Nelson and Kentucky’s Senator Jim Bunning. The Adoption Tax Credit Guarantee Act would extend tax credits that are currently set to expire in 2010.

“As an adoptive parent myself, I know firsthand the joys that come to opening your heart and home to a child,” said Senator Nelson. “Unfortunately, it can be very expensive. My legislation encourages adoption by continuing a tax credit that makes the process more affordable for families.”

Depending on the type of adoption, costs can exceed $40,000, placing this option out of reach financially for some families. The Adoption Tax Credit, first passed as part of the 2001 tax cut package, allows a dollar-for-dollar reduction in taxes for qualified expenses up to a limit. The credit, which is indexed for inflation, was $10,960 in 2006. Unfortunately, the credit will expire in 2010 and credits will be limited to $5,000 per adoption and $6,000 per adoption of a special needs child – amounts set under a 1980’s era law.

The Adoption Tax Credit Guarantee Act would repeal the current sunset provision and continue the tax credit past 2010. It encourages adoption by making it more affordable for families, ensuring that more children are in stable, loving permanent homes. Studies have found that children in such homes have better social, economic, and behavioral outcomes.

In tax year 2004, the last year records are available; approximately 71,100 tax returns included a claim for the adoption tax credit, with a total credit value claimed of $301.9 million.

“I have long worked to make adoption a more affordable, more accessible option for families,” said Senator Nelson. “The Adoption Tax Credit has helped thousands of parents adopt and I want to make sure that it is fully available for families in years to come.”