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2023 SESSION

23100806D
HOUSE BILL NO. 1500
Offered January 11, 2023
Prefiled January 3, 2023
A BILL to amend the Code of Virginia by adding in Article 3 of Chapter 3 of Title 58.1 a section numbered 58.1-339.14, relating to adoption tax credit.
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Patrons-- Runion, Anderson, Avoli, Campbell, E.H., March, Tata and Williams; Senator: Vogel
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Referred to Committee on Finance
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Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia is amended by adding in Article 3 of Chapter 3 of Title 58.1 a section numbered 58.1-339.14 as follows:

§ 58.1-339.14. Adoption Tax Credit.

A. As used in this section:

"Child with special needs" means any child if (i) the Commonwealth has determined that the child cannot or should not be returned to the home of his parents, (ii) the Commonwealth has determined that there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance, and (iii) such child is a citizen or resident of the United States.

"Eligible child" means any individual who has not attained the age of 18 or is physically or mentally incapable of caring for himself.

"Qualified adoption expenses" means reasonable and necessary adoption fees, court costs, attorney fees, and other expenses which are (i) directly related to, and the principal purpose of which is for, the legal adoption of an eligible child by the taxpayer, (ii) which are not incurred in violation of State or Federal law or in carrying out any surrogate parenting arrangement, (iii) which are not expenses in connection with the adoption by an individual of a child who is the child of such individual’s spouse, and (iv) which are not reimbursed under an employer program or otherwise.

B. For taxable years beginning on or after January 1, 2023, but before January 1, 2028, an individual or married couple who finalize a legal adoption shall be allowed a nonrefundable tax credit against the tax levied pursuant to § 58.1-320 for the amount of qualified adoption expenses paid or incurred by the individual or married couple. The aggregate amount of qualified adoption expenses that may be taken into account for all taxable years with respect to the adoption of a child by the individual or married couple shall not exceed $10,000. The credit provided by this section may only be claimed by one individual or married couple per adopted child.

C. In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years.

D. The amount of the credit that may be claimed in any single taxable year shall not exceed the individual's liability for taxes imposed by this chapter for that taxable year. If the amount of the credit allowed under this section exceeds the individual's tax liability for the taxable year in which the eligible expenditures occurred, the amount that exceeds the tax liability may be carried over for credit against the income taxes of the individual in the next five taxable years or until the total amount of the tax credit has been taken, whichever is sooner.

D. The Tax Commissioner shall develop guidelines for claiming the credit provided by this section. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.).