The Ins and Outs of Financing Adoption

Make sure you're prepared for the financial obligations that go along with adoption.
Make sure you're prepared for the financial obligations that go along with adoption.

How much does adoption really cost, and how will you pay for it?

Many loving parents who consider adoption are anxious about the high financial costs which may be associated with both the adoption process and the many services that waiting children with special needs may require. Below are resources to help families plan for or defray adoption costs.


Costs of Adoption

There are many factors that influence the cost of adoption. The average cost of adopting a child in the United States varies according to the type of placement:

  • Public agency adoptions, where children are adopted from the foster care system, range from zero to $2,500.
  • Private agency adoption ranges from $4,000 to $30,000 or more.
  • Independent adoption ranges from $8,000 to $30,000 or more.
  • Adopting a child from another country through either a private agency or an independent adoption ranges from $7,000 to $25,000 or more.

Free Booklet

The National Endowment for Financial Education (NEFE) has developed a booklet titled "How to Make Adoption an Affordable Option." This booklet provides information for all prospective adoptive parents regarding financial assistance, benefits, and tax breaks for all types of adoptions. It also provides a breakdown of what fees may be involved in the adoption process. The booklet is available on the NEFE Web site at

Tax Credits

Effective January 1, 1997, there is a federal adoption tax credit of $5,000 per child, whether the adoption is domestic or international. Parents adopting a U.S. child with special needs qualify for a $6,000 tax credit. The tax credit for intercountry adoptions and for domestic non-special-needs adoptions will expire in 2002.

At the Web site of the Internal Revenue Service, you will find information about tax rules and changes to those rules. You can also look to the IRS Web site for information about the IRS Adoption Taxpayer Identification Number, and for "Publication 968" on the Adoption Tax Credit and Tax Exclusion.

Additionally, several states have approved state tax credits for families adopting children from the public child welfare system. For more information, please contact your state's Department of Taxation or Revenue or your State Adoption Specialist.

Adoption Subsidy

If you are interested in adopting a child who is currently waiting for adoption in foster care, fees are often kept to a bare minimum or even waived. Many of the children will be eligible for federally funded or state-funded adoption subsidy payments, which help you meet the child's ongoing needs. In addition, some children qualify for SSI (Social Security Insurance) payments or Medicaid coverage because of their medical conditions.

Children with special needs may qualify for an adoption subsidy that is paid to adoptive families to help them pay for their child's need for ongoing therapies or treatment. Adoption subsidy agreements must be negotiated with the placing agency before the child's adoption is finalized.

For more information on adoption subsidy, visit the Web site of the North American Council for Adoptable Children (NACAC) at This Web site allows you to click on your state and find out how adoption subsidy is handled and who the state contact person is. You can also call their NAATRIN adoption subsidy helpline with specific subsidy questions at (800) 470-6665.

Nonrecurring Adoption Expense Reimbursement

After families have finalized the adoption of a child with special needs from the public child welfare system, they may be able to apply for reimbursement of expenses they paid related to the adoption. These expenses may include the home-study fee, costs for travel to meet the child, attorney's fees, etc. Each state sets a cap for the maximum amount of reimbursement, which cannot exceed $2,000. A few states do not allow this benefit.

Employer Benefits

Many employers offer a range of benefits for families who adopt, including paid or unpaid leave when the child arrives in the home, reimbursement of a portion of the adoption expenses, assistance with adoption information, and referral services. Corporate human resources departments will provide employees with information about available benefits. For additional information, see the National Adoption Center's "Guide For Employee Benefits." Contact them at (215) 735-9988 or (800) TO-ADOPT.

Adoption Loans

The National Adoption Foundation has established a $9 million revolving loan bank to provide unsecured loans to adoptive families. Payments and interest then help other adoptive parents. NAF also has a home equity loan program. Both loan programs are financed through MBNA. The foundation has a limited program to provide grants, usually in the $2,500 range, to assist families with adoption costs. You can call the foundation to request that an application packet be sent to you. For grant information, call (203) 791-3811.

For loan information through the National Adoption Foundation, call MBNA at (800) 448-7061 or contact:

The National Adoption Foundation 100 Mill Plain Road Danbury, CT 06811

Jewish families may apply to the Hebrew Free Loan Association for interest-free loans to Jewish adults who wish to adopt domestically or internationally. Their Web site is at

Several local and national banks now offer adoption loans; check with banks in your area.

Source: National Adoption Information Clearinghouse

Content courtesy of American Baby.