The IRS has begun issuing automatic refunds to more than 50,000 taxpayers who carried forward unused Adoption Tax Credit amounts from prior years, the agency announced October 16, 2026 (IR-2026-123). Most eligible taxpayers should see their refunds by the end of the year — without filing an amended return.
The refunds follow a Treasury Department clarification of how the Working Families Tax Cuts (the rebranded One Big Beautiful Bill Act) affect the adoption tax credit. Under the new interpretation, for tax year 2025 only, unused credit amounts carried forward from tax years 2020 through 2024 can increase the refundable portion of the 2025 credit, subject to a $5,000-per-qualifying-child limit.
"By issuing refunds without requiring eligible families to file an amended return, the IRS is helping reduce the financial burden on those who decided to adopt a child into their family," said IRS Chief Executive Officer Frank J. Bisignano. The IRS will automatically adjust affected accounts and issue refunds or apply amounts to other tax or non-tax debts.
Taxpayers will receive notices, generally within 30 days of the adjustment, showing the amount and whether it produced a refund or offset another debt. If you adopted a child and carried forward unused credit from 2020-2024, review the notice against your 2025 return and keep it with your tax records — no action is required to receive the refund.