Nebraska families can now claim up to $1,767 back for adopting a child

New tax credit kicks in for 2026

Nebraska families who adopt a child can now claim a brand-new state tax credit.

The credit took effect Jan. 1, 2026, and covers 10% of whatever federal adoption tax credit the family qualifies for. That could mean up to roughly $1,767 back per child.

Even better, the credit is refundable. So if it’s more than what a family owes in state taxes, they get the difference back as cash.

The law came through LB 647, which folded in the Adoption Tax Credit Act from LB 709.

Sen. Bostar introduced the original bill

Sen. Eliot Bostar of Lincoln kicked things off on Jan. 22, 2025, when he introduced LB 709 to create the Adoption Tax Credit Act. That bill later got rolled into LB 647, an omnibus package with several tax provisions.

If you look up LB 709 now, it shows “indefinitely postponed,” but that’s normal.

Nebraska has a unicameral legislature, and standalone bills regularly get merged into bigger packages. The substance of the adoption credit lives inside LB 647, which passed.

The credit could reach $1,767 per child

Here’s how the math works. The federal adoption tax credit tops out at about $17,670 per child for 2026.

Nebraska’s credit equals 10% of that, so the maximum comes to roughly $1,767.

Because it’s refundable, even families who owe little or nothing in state income tax can get that money back.

Say a Nebraska family spends $15,000 on a domestic adoption and claims the full amount as their federal credit. They’d get an extra $1,500 on their state return.

And the credit counts per child, not per year.

Residents must meet federal adoption rules

To qualify, you need to be a Nebraska resident and eligible for the federal adoption tax credit under the tax code. The child must be under 19 or physically or mentally unable to care for themselves.

If your adoption expenses stretch across more than one year, you can split the credit across those tax years too. That flexibility helps families who go through longer adoption processes.

Some adoptions do not qualify

Not every adoption counts. Stepparent adoptions and surrogacy arrangements don’t qualify for the credit.

Families whose adoption costs were covered by an employer or a government program can’t claim it either, according to the Nebraska Legislature’s fiscal analysis.

On the federal side, the credit starts phasing out for families with modified adjusted gross income above about $265,080 and disappears entirely above roughly $305,080 for 2026.

Congress made the federal credit refundable too

Nebraska isn’t the only one making changes. The One Big Beautiful Bill Act, signed July 4, 2025, made the federal adoption tax credit partially refundable for the first time.

Families can now get back up to about $5,120 even if they owe no federal taxes. Before that, the federal credit could only reduce a tax bill to zero.

Now Nebraska’s fully refundable state credit stacks on top of the partially refundable federal one, according to the IRS. Adoptive families in the state benefit from both changes at once.

Adoption costs vary widely by type

Private domestic adoptions typically run between $20,000 and $45,000. Adopting through the foster care system costs far less, often under $2,500.

The combined federal and state credits can cover a real chunk of those expenses. Nebraska joins a growing list of states with their own adoption tax benefits.

Ohio and Missouri each offer credits up to $10,000, and Iowa offers up to $5,000 that’s also refundable.

Hundreds of Nebraska kids need families

About 913 children in Nebraska are waiting for adoptive families, according to AdoptUSKids, a federally funded adoption resource.

The Nebraska Foster Care Review Office tracked 6,731 children who spent time in out-of-home care during fiscal year 2023-24. About 25% of kids who leave the state’s foster care system do so through adoption.

On average, children in out-of-home placement in Nebraska spend about 25.6 months waiting.

Families file the credit on state returns

Claiming the credit starts with the federal side. Families first calculate their federal adoption tax credit using IRS Form 8839, then apply the 10% Nebraska credit on their state income tax return.

The Nebraska Department of Revenue may add its own rules and paperwork.

Families should keep detailed records of every adoption-related cost, including agency fees, court costs, legal fees, and travel expenses.

Special needs adoptions get extra help

Federal law lets families who adopt a child with special needs claim the full federal credit even if their actual expenses were lower. The state where the adoption happens determines special needs status.

The One Big Beautiful Bill Act also now recognizes Indian tribal governments alongside state governments for making that call.

Nebraska’s state credit applies on top of whatever federal credit a special needs adoption produces, giving those families an extra boost.

The credit costs Nebraska little to run

The Nebraska Department of Revenue said the credit will reduce General Fund revenues, though the amount depends on how many families claim it.

There’s a one-time cost of about $65,087 to update the state’s tax systems, according to the legislature’s fiscal note for LB 647.

The credit has no expiration date in the current law, and the Department of Revenue can adopt rules and regulations as needed.

Families can claim it starting in 2027

The credit applies to tax years beginning on or after Jan. 1, 2026.

That means families who finalize adoptions this year will claim it when they file their 2026 state tax returns in early 2027. Nebraska now joins the list of states that use their tax codes to help offset adoption costs.

Families thinking about adopting should talk to a tax professional to figure out how the state and federal credits work together for their situation.

This article was created with AI assistance and human editing.

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