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2Nov, 17

As we expected, the Republican tax plan, released today, eliminates the Adoption Tax Credit. Here is the section by section text discussing eliminating the ATC:

Sec. 1102. Repeal of nonrefundable credits.

Current law: Under current law, certain individuals who are over the age of 65 or who have retired on disability before the end of the taxable year may claim a credit for 15 percent of such taxpayer’s eligible amount for the year. The eligible amount is $7,500 for a joint return, $5,000 for a single individual, or $3,750 for a married individual filing a joint return. The credit phases out as adjusted gross income exceeds the eligible amount.

Under current law, a taxpayer may claim an adoption tax credit of $13,570 per eligible child for 2017 (both special needs and non-special needs adoptions). These benefits are phased-out for taxpayers with adjusted gross income (AGI) between $203,540 and $243,540 for 2017. The amount of the credit and the income phase-outs are indexed for inflation. For a non-special needs adoption, the credit amount is limited to actual adoption expenses. The credit is not refundable, but unused amounts may be carried forward for five years.

Under current law, some State and local governments issue private activity bonds (PABs) to finance owner-occupied residences. In lieu of issuing such bonds, State and local governments may enable homebuyers to claim a Federal tax credit for interest on certain home mortgages by providing them with mortgage credit certificates.

Under current law, a taxpayer may claim a credit for each qualified plug-in electric-drive motor vehicle placed in service. A qualified plug-in electric-drive motor vehicle is a motor vehicle that has at least four wheels, is manufactured for use on public roads, meets certain emissions standards (except for certain heavy vehicles), draws propulsion using a traction battery with at least four kilowatt hours of capacity, and is capable of being recharged from an external source of electricity. The maximum credit is capped at $7,500 regardless of vehicle weight. In addition, after that date, no credit is available for low speed plug-in vehicles or for plug-in vehicles weighing 14,000 pounds or more. The total plug-in vehicle limitation is 200,000 plug-in vehicles per manufacturer. The credit phases out over four calendar quarters beginning in the second calendar quarter following the quarter in which the manufacturer limit is reached.

Provision: Under the provision, the credit for individuals over age 65 or who have retired on disability, the adoption credit, the tax credit associated with mortgage credit certificates, and the credit for plug-in electric drive motor vehicles would be repealed.

The provision repealing qualified plug-in electric drive motor vehicles would be effective for vehicles placed in service for tax years beginning after 2017. The other provisions would be effective for tax years beginning after 2017.

JCT estimate: According to JCT, the provision would increase revenues by $4.0 billion over 2018-2027.

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