Tax information for Indian tribal governments

Recent developments

Changes to guidance, law and procedures that affect Indian Tribal Governments.

One Big Beautiful Bill Information

Section 70402 of the One Big Beautiful Bill makes the adoption tax credit partially refundable up to $5,000 (indexed for inflation) beginning in taxable years starting after December 31, 2024. Any carried forward amount cannot be used to calculate the refundable portion of the credit in future years.

Section 70403 of the One Big Beautiful Bill recognizes Indian Tribal governments for purposes of determining whether a child has special needs for purposes of the adoption tax credit.

This provision provides parity to Indian Tribal governments, giving Tribal governments the same ability as State governments to determine whether a child has special needs for the purposes of the adoption tax credit.

A child is considered to be special needs if:

1. A State or Tribal government has determined that the child cannot or should not be returned to the home of their parents,
2. A State or Tribal government has determined that it would be difficult to place the child for adoption without providing adoption assistance to the adoptive family due to a specific factor or condition (such as ethnic background, age, medical condition or disability, or membership in a minority or sibling group), and
3. The child is a United States citizen or resident.

When a child is deemed special needs by a State or Tribal government, the adoptive family becomes eligible, subject to income limitations, for the full adoption tax credit ($17,280 per eligible child in 2025) for the tax year the adoption becomes finalized, regardless of the amount of qualified adoption expenses actually paid or incurred for the adoption.