How to Claim the Illinois Adoption Tax Credit

The Illinois Adoption Tax Credit provides financial assistance to residents adopting a child. This credit is a dollar-for-dollar reduction of your state tax liability, helping to offset the costs associated with the legal process of adoption. It is a nonrefundable credit, which means it can reduce your tax liability to zero, but you will not receive any portion of the credit back as a refund if it exceeds your total tax bill.

Determining Your Eligibility

Eligibility for the Illinois Adoption Tax Credit is directly linked to your qualification for the federal Adoption Tax Credit. If you do not qualify for the federal credit, you automatically do not qualify for the Illinois credit. The foundational requirement is the adoption of an eligible child, defined as an individual who is under the age of 18. An exception exists for individuals who are physically or mentally incapable of self-care, who are considered eligible regardless of their age.

The federal rules have specific income limitations that change annually. For the 2025 tax year, the federal credit begins to phase out for taxpayers with modified adjusted gross incomes (MAGI) above $259,190 and is completely unavailable for those with a MAGI of $299,190 or more. To claim the credit, you generally must file as married filing jointly if you are married. The adoption of a spouse’s child does not qualify for this tax benefit.

Calculating the Allowable Credit Amount

The calculation for the Illinois credit is based on the qualified adoption expenses you incur. These are defined as reasonable and necessary costs directly related to the legal adoption of a child. Qualifying expenses include:

• Adoption agency fees
• Court costs
• Attorney fees
• Travel expenses, which encompass costs like meals and lodging while away from home for the adoption

Expenses that are reimbursed by an employer or paid for using funds from a government program are not eligible.

The Illinois credit amount is up to $2,000 per eligible child. A higher credit amount of up to $5,000 is available for the adoption of a child who is an Illinois resident and is at least one year old at the time of adoption. For married individuals filing separate returns, these maximums are reduced to $1,000 and $2,500, respectively. The Illinois credit cannot exceed the amount of the federal adoption credit you claimed for the same child.

The Illinois Adoption Tax Credit includes a carryforward provision. If your calculated credit is greater than your Illinois tax liability for the year, the unused portion of the credit can be carried forward. This amount can be applied against your tax liability for up to five subsequent years.

Required Documentation and Forms

You must maintain records of all qualified adoption expenses. This includes keeping receipts, invoices, and canceled checks for payments made toward adoption fees, legal services, and court filings. An important document is the final court order of adoption, which serves as the legal proof of the completed process.

The primary form required to claim the credit is Illinois Schedule 1299-C, Income Tax Credits. Before you can complete this state form, you must first fill out federal Form 8839, Qualified Adoption Expenses. The information from your completed federal Form 8839 is necessary to accurately calculate your Illinois credit.

When preparing these forms, you will need to transfer key figures from Form 8839 to Schedule 1299-C. This includes the total amount of your qualified adoption expenses and the final calculated amount of your federal credit. Having your documents organized will streamline this process.

How to Claim the Credit on Your Tax Return

The total adoption credit amount calculated on Schedule 1299-C is entered on the designated line of your main Illinois tax return, Form IL-1040. This transfers the calculated credit to your overall tax computation, where it will reduce your final tax liability.

To complete your filing, you must attach the completed Schedule 1299-C to your Form IL-1040. It is also a requirement to include a copy of your federal Form 8839 with your Illinois tax return. This submission provides the state with the necessary documentation to verify your eligibility and the basis for your credit calculation.

Failing to attach these required forms will result in the denial of your credit claim. Ensure that both Schedule 1299-C and the copy of federal Form 8839 are securely included with your IL-1040 when you file, whether you are submitting your return electronically or by mail.