KEY POINTS
- Coverage of non-recurring adoption expenses can help reduce upfront adoption costs for families – covering expenses like legal fees, court costs, home studies, and necessary transportation, food, and lodging – supporting permanency for children with special needs.
- A family receiving $2,000 in 1986 had almost three times the buying power of a family receiving the same amount in Fiscal Year 2025 (FY25) – yet the maximum amount for non-recurring adoption expenses has remained fixed at $2,000 per child (with up to $1,000 being reimbursed by the federal government) for nearly 40 years, since 1986.
- From FY19 to FY25, the percentage of children exiting foster care to adoption remained fairly consistent, between 25 and 27 percent. During this time there was also a 33 percent decline in the total number of adoptions, which is reflective of an overall drop in the number of children entering foster care – meaning there are fewer children in the system overall, and therefore fewer children exiting foster care through any pathway, including adoption.
- In FY24, 47,335 children exited foster care to adoption. An estimated 90 percent of those children would qualify as "special needs," yet many of these families did not access the non-recurring adoption expenses benefit.
- An exploratory analysis suggests that raising the cap from $2,000 to $2,500 might have increased the ceiling for FY24 federal reimbursement costs by about three percent, and raising it to $3,000 might have increased costs by about six percent; both estimates are lower than what the federal government actually reimbursed in several recent fiscal years.
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BACKGROUND
The actual cost of adopting a child from foster care is difficult to estimate precisely, with estimates ranging from roughly $2,500 up to $10,000 depending on individual circumstances, though most sources indicate that adoption from foster care is often free or low-cost since the majority of associated expenses are covered through state and federal programs.
The Title IV-E Adoption Assistance Program, administered by the Children's Bureau within the Administration for Children and Families, provides monthly subsidies and non-recurring adoption expense coverage to assist families adopting children with special needs. Non-recurring adoption expenses include reasonable and necessary fees such as legal fees, court costs, home studies, and necessary transportation, food, and lodging. Federal financial participation is available at 50 percent of the agency's amount, up to $2,000 per adoptive placement, meaning the federal government's maximum reimbursement is $1,000 per placement. States may set a lower or higher maximum. A separate Federal Adoption Tax Credit allows families to claim up to $17,280 (for 2025) in qualified adoption expenses, but this brief focuses specifically on the non-recurring expenses benefit.
Surveys cited in the brief found that cost is widely perceived as a barrier to adoption, with one survey finding 97 percent of respondents identifying cost as an obstacle and 48 percent calling it an "extreme barrier."
POLICY HISTORY OF NON-RECURRING ADOPTION EXPENSES
The Title IV-E Adoption Assistance Program was created in 1980. In 1986, the Tax Reform Act repealed a $1,500 itemized deduction for special-needs adoption expenses and expanded federal financial participation to include non-recurring adoption expenses, establishing the 50 percent federal matching rate up to $2,000 per adoption (maximum federal share of $1,000). The changes were implemented via Final Rule in 1988. Additional legislation in 1997 (Adoption and Safe Families Act) and 2008 (Fostering Connections to Success and Increasing Adoptions Act) addressed other aspects of adoption assistance but did not change the $2,000 non-recurring expense cap.
THE $2,000 COVERAGE OF NON-RECURRING ADOPTION EXPENSES HAS LOST NEARLY TWO-THIRDS OF ITS VALUE SINCE 1986
Figure 1 illustrates the widening gap between the fixed $2,000 cap and its inflation-adjusted equivalent. By 2025, the inflation-adjusted value approaches $5,900, nearly three times the 1986 cap value. A family receiving $2,000 in 1986 had almost three times the buying power of a family receiving the same amount in 2025, meaning the $2,000 today buys roughly a third of what it used to.
THE PERCENTAGE OF CHILDREN WHO EXIT FOSTER CARE TO ADOPTION HAS REMAINED CONSISTENT WHILE OVERALL NUMBERS HAVE DECLINED SINCE 2019
From 2019 to 2025, the percentage of children exiting foster care to adoption remained consistent, between 25 and 27 percent. However, the total number of children exiting to adoption fell from approximately 64,415 in 2019 to 43,380 in 2025, about a 33 percent decline, reflecting a broader system-wide decrease in foster care entries and exits overall
INCREASING THE CAP, WHICH IS ONLY A SMALL PORTION OF THE OVERALL TITLE IV-E BUDGET, AND REDUCING BARRIERS COULD HELP TO IMPROVE PERMANENCY OUTCOMES.
In FY24, non-recurring adoption federal reimbursements accounted for just 0.57 percent of total Title IV-E Adoption Assistance federal program costs. In FY24, 47,335 children exited foster care to adoption, with an estimated 90 percent qualifying as "special needs," yet many eligible families did not access the benefit. Barriers include the requirement that families finalize adoption agreements before a child's full needs are known, inconsistent agency practices, and states' option to set caps below $2,000.
ALTHOUGH AVAILABLE DATA PRECLUDES A PRECISE ESTIMATE, AN INCREASE IN THE CAP TO $3,000 IN FY24 WOULD LIKELY HAVE RESULTED IN LESS IN FEDERAL EXPENDITURES THAN THE ACTUAL NON-RECURRING REIMBURSEMENTS CLAIMED IN FY19 AND FY20
Due to data quality limitations, precise cost estimates are difficult. In FY24, raising the cap from $2,000 to $2,500 would have added an estimated $660,000 in federal reimbursement costs, about a three percent increase; raising the cap to $3,000 would have added an estimated $1,320,000, about a six percent increase. Both hypothetical totals are lower than actual non-recurring federal reimbursements claimed in FY19 and FY20. Only six out of 53 states and territories reached the $1,000 federal reimbursement cap per child in FY24.
CONCLUSION
Since 1986, the federal cap for non-recurring adoption expenses has remained fixed at $2,000 per child, but its real value has diminished significantly, equating to roughly $5,900 in FY25 if adjusted for inflation. Raising the cap would likely have only modest federal budget implications but could help restore some of the purchasing power lost since 1986 and strengthen support for adoptive families by reducing upfront financial barriers to permanency.
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