# § 137. Adoption assistance programs
**(a)** **Exclusion**
**(1)** **In general** Gross income of an employee does not include amounts paid or expenses incurred by the employer for qualified adoption expenses in connection with the adoption of a child by an employee if such amounts are furnished pursuant to an adoption assistance program.
**(2)** **$10,000 exclusion for adoption of child with special needs regardless of expenses** In the case of an adoption of a child with special needs which becomes final during a taxable year, the qualified adoption expenses with respect to such adoption for such year shall be increased by an amount equal to the excess (if any) of $10,000 over the actual aggregate qualified adoption expenses with respect to such adoption during such taxable year and all prior taxable years.
**(b)** **Limitations**
**(1)** **Dollar limitation** The aggregate of the amounts paid or expenses incurred which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000.
**(2)** **Income limitation** The amount excludable from gross income under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so excludable (determined without regard to this paragraph but with regard to paragraph (1)) as—
**(A)** the amount (if any) by which the taxpayer’s adjusted gross income exceeds $150,000, bears to
**(B)** $40,000.
**(3)** **Determination of adjusted gross income** For purposes of paragraph (2), adjusted gross income shall be determined—
**1** without regard to this section and sections 85(c) [^1] 221, 911, 931, and 933, and
So in original. Probably should be followed by a comma.
**(B)** after the application of sections 86, 135, 219, and 469.
**2** **Adoption assistance program** For purposes of this section, an adoption assistance program is a separate written plan of an employer for the exclusive benefit of such employer’s employees—
An adoption reimbursement program operated under section 1052 of title 10, United States Code (relating to armed forces) or section 541 [^2] of title 14, United States Code (relating to members of the Coast Guard) shall be treated as an adoption assistance program for purposes of this section.
**(1)** under which the employer provides such employees with adoption assistance, and
**(2)** which meets requirements similar to the requirements of paragraphs (2), (3), (5), and (6) of section 127(b).
See References in Text note below.
**(d)** **Qualified adoption expenses** For purposes of this section, the term “qualified adoption expenses” has the meaning given such term by section 23(d) (determined without regard to reimbursements under this section).
**(e)** **Certain rules to apply** Rules similar to the rules of subsections (e), (f), and (g) of section 23 shall apply for purposes of this section.
**(f)** **Adjustments for inflation** In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in subsection (a)(2) and paragraphs (1) and (2)(A) of subsection (b) shall be increased by an amount equal to—
If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.
**(1)** such dollar amount, multiplied by
**(2)** the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2001” for “calendar year 2016” in subparagraph (A)(ii) thereof.
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**Source Credit**: (Added Pub. L. 104–188, title I, § 1807(b), Aug. 20, 1996, 110 Stat. 1901; amended Pub. L. 105–34, title XVI, § 1601(h)(2)(C), Aug. 5, 1997, 111 Stat. 1092; Pub. L. 105–277, div. J, title IV, § 4003(a)(2)(C), Oct. 21, 1998, 112 Stat. 2681–908; Pub. L. 107–16, title II, § 202(a)(2), (b)(1)(B), (2)(B), (d)(2), (e)(2), title IV, § 431(c)(1), June 7, 2001, 115 Stat. 47, 48, 68; Pub. L. 107–147, title IV, §§ 411(c)(2), 418(a)(2), Mar. 9, 2002, 116 Stat. 45, 57; Pub. L. 108–311, title IV, § 403(e), Oct. 4, 2004, 118 Stat. 1188; Pub. L. 108–357, title I, § 102(d)(1), Oct. 22, 2004, 118 Stat. 1428; Pub. L. 111–148, title X, § 10909(a)(2), (b)(2)(J), (c), Mar. 23, 2010, 124 Stat. 1022, 1023; Pub. L. 111–312, title I, § 101(b)(1), Dec. 17, 2010, 124 Stat. 3298; Pub. L. 115–97, title I, §§ 11002(d)(1)(N), 13305(b)(1), Dec. 22, 2017, 131 Stat. 2060, 2126; Pub. L. 115–141, div. U, title IV, § 401(a)(40), Mar. 23, 2018, 132 Stat. 1186; Pub. L. 116–260, div. EE, title I, § 104(b)(2)(E), Dec. 27, 2020, 134 Stat. 3041; Pub. L. 117–2, title IX, § 9042(b)(4), Mar. 11, 2021, 135 Stat. 122.)
### Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under .
## Editorial Notes
### References in Text
, referred to in subsec. (c), was redesignated by , , , and references to deemed to refer to such redesignated section, see , set out as a References to Sections of Title 14 as Redesignated by note preceding , Coast Guard.
### Prior Provisions
A prior section 137 was renumbered .
### Amendments
2021—Subsec. (b)(3)(A). inserted “85(c)” before “221”.
2020—Subsec. (b)(3)(A). struck out “222,” after “sections 221,”.
2018—Subsec. (c). substituted “section 541” for “section 514” in concluding provisions.
2017—Subsec. (b)(3)(A). , struck out “199,” before “221”.
Subsec. (f)(2). , substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.
2010—Subsec. (a)(2). , (c), as amended by , temporarily substituted “$13,170” for “$10,000” in heading and text. See Effective and Termination Dates of 2010 Amendment note below.
Subsec. (b)(1). , (c), as amended by , temporarily substituted “$13,170” for “$10,000”. See Effective and Termination Dates of 2010 Amendment note below.
Subsec. (d). , (c), as amended by , temporarily substituted “section 36C(d)” for “section 23(d)”. See Effective and Termination Dates of 2010 Amendment note below.
Subsec. (e). , (c), as amended by , temporarily substituted “section 36C” for “section 23”. See Effective and Termination Dates of 2010 Amendment note below.
Subsec. (f). , (c), as amended by , temporarily amended subsec. (f) generally. See Effective and Termination Dates of 2010 Amendment note below. Prior to amendment subsec. (f) read as follows: “.—In the case of a taxable year beginning after , each of the dollar amounts in subsection (a)(2) and paragraphs (1) and (2)(A) of subsection (b) shall be increased by an amount equal to—
“(1) such dollar amount, multiplied by
“(2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2001’ for ‘calendar year 1992’ in subparagraph (B) thereof.
If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.”
2004—Subsec. (b)(1). amended directory language of . See 2002 Amendment note below.
Subsec. (b)(3)(A). inserted “199,” before “221”.
2002—Subsec. (a). , amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “Gross income of an employee does not include amounts paid or expenses incurred by the employer for adoption expenses in connection with the adoption of a child by an employee if such amounts are furnished pursuant to an adoption assistance program. The amount of the exclusion shall be—
“(1) in the case of an adoption of a child other than a child with special needs, the amount of the qualified adoption expenses paid or incurred by the taxpayer, and
“(2) in the case of an adoption of a child with special needs, $10,000.”
Subsec. (b)(1). , as amended by , substituted “subsection (a)” for “subsection (a)(1)”.
Subsec. (f). , inserted at end “If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.”
2001—Subsec. (a). , reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Gross income of an employee does not include amounts paid or expenses incurred by the employer for qualified adoption expenses in connection with the adoption of a child by an employee if such amounts are furnished pursuant to an adoption assistance program.”
Subsec. (b)(1). , substituted “subsection (a)(1)” for “subsection (a)” and “$10,000” for “$5,000 ($6,000, in the case of a child with special needs)”.
Subsec. (b)(2)(A). , substituted “$150,000” for “$75,000”.
Subsec. (b)(3)(A). , inserted “222,” after “221,”.
Subsec. (f). , (e)(2), added subsec. (f) and struck out heading and text of former subsec. (f). Text read as follows: “This section shall not apply to amounts paid or expenses incurred after .”
1998—Subsec. (b)(3)(A). inserted “221,” after “and sections”.
1997—Subsec. (b)(1). substituted “of the amounts paid or expenses incurred which may be taken into account” for “amount excludable from gross income”.
## Statutory Notes and Related Subsidiaries
### Effective Date of 2021 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 2020 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 2017 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to taxable years beginning after , except as provided by transition rule, see , set out as a note under .
### Effective and Termination Dates of 2010 Amendment
Amendment by terminated applicable to taxable years beginning after , and section is amended to read as if such amendment had never been enacted, see , set out as a note under .
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 2004 Amendments
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by effective as if included in the provisions of the Job Creation and Worker Assistance Act of 2002, , to which such amendment relates, see , set out as a note under .
### Effective Date of 2002 Amendment
Amendment by applicable to taxable years beginning after , except that amendment by section 411(c)(2)(B) applicable to taxable years beginning after , see , set out as a note under .
Amendment by effective as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, , to which such amendment relates, see , set out as a note under .
### Effective Date of 2001 Amendment
Amendment by section 202(b)(1)(B), (2)(B), (d)(2), (e)(2) of applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to payments made in taxable years beginning after , see , set out as a note under .
### Effective Date of 1998 Amendment
Amendment by effective as if included in the provision of the Taxpayer Relief Act of 1997, , to which such amendment relates, see section 4003() of , set out as a note under .
### Effective Date of 1997 Amendment
Amendment by effective as if included in the provisions of the Small Business Job Protection Act of 1996, , to which it relates, see , set out as a note under .
### Effective Date
Section applicable to taxable years beginning after , see , set out as a note under .
### Transfer of Functions
For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security, and for treatment of related references, see sections 468(b), 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of , as modified, set out as a note under .