Bill Text: VA HB1517 | 2024 | Regular Session | Introduced
Bill Title: Adoption; creates tax credit for qualified expenses.
Spectrum: Partisan Bill (Republican 6-0)
Status: (Introduced) 2024-02-13 - Left in Finance [HB1517 Detail]
Download: Virginia-2024-HB1517-Introduced.html
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 58.1-339.15 as follows:
§58.1-339.15. Adoption tax credit.
A. As used in this section:
"Adoption expense" means a reasonable and necessary adoption fee, court cost, attorney fee, or other expense that is (i) directly related to, and for the primary purpose of, adoption of a qualifying child through a domestic adoption; (ii) not incurred in violation of federal or state law in carrying out any surrogate parenting arrangement; and (iii) not paid or reimbursed by any employer or state assistance program.
"Domestic adoption" means an adoption of a child who is a United States citizen or a resident of the United States or its possessions before the adoption effort begins.
"Qualifying child" means an individual who is younger than 18 years of age. "Qualifying child" does not include an individual who is a child of the taxpayer's spouse.
"State or federal assistance" means public funds that are (i) expended for the benefit of an individual in need of financial, medical, food, housing, or related assistance; (ii) means tested; and (iii) provided by a state government or the federal government.
B. 1. For taxable years beginning on or after January 1, 2024, but before January 1, 2029, a nonrefundable tax credit against the tax levied pursuant to §58.1-320 may be claimed by (i) an individual whose Virginia adjusted gross income is more than $27,500 but less than $55,000 or (ii) a married couple filing jointly whose Virginia adjusted gross income is $55,000 or more but less than $110,000 who finalizes a legal domestic adoption in the taxable year for the amount of qualified adoption expenses paid or incurred by the individual or married couple. The amount of the credit shall be equal to the lesser of $3,500 or the amount of the individual's or married couple's adoption expenses.
2. A refundable tax credit against the tax levied pursuant to §58.1-320 may be claimed by (i) an individual whose Virginia adjusted gross income is less than $27,500 or (ii) a married couple filing jointly whose Virginia adjusted gross income is less than $55,000 who finalizes a legal domestic adoption of a qualifying child in the taxable year for the amount of qualified adoption expenses paid or incurred by the individual or married couple. The amount of the credit shall be equal to the lesser of $3,500 or the amount of the individual's or married couple's adoption expenses.
C. An individual or married couple filing jointly may claim this credit in addition to a federal tax credit under 26 U.S.C. §23; however, an individual or married couple filing jointly shall not claim a credit under this section to the extent that such taxpayer claims a federal tax credit under 26 U.S.C. §23 for the same adoption expense. Such taxpayer shall not have received state or federal assistance during the taxable year in which the adoption is finalized. The credit provided by this section may only be claimed by one individual or married couple per adopted child.
D. A nonresident individual or a part-year resident individual who claims this credit may claim only an apportioned amount of the credit equal to the product of (i) the state income tax percentage for the nonresident or part-year resident and (ii) the amount of the tax credit that the nonresident or part-year resident would have been allowed to claim but for the apportionment requirement of this section.
E. 1. The amount of the credit that may be claimed under subdivision B 1 in any single taxable year shall not exceed the taxpayer's liability for taxes imposed by this chapter for that taxable year. If the amount of the credit allowed under this section exceeds the taxpayer's tax liability for the taxable year in which the costs were incurred, the amount that exceeds the tax liability may be carried over for credit against the income taxes of the taxpayer in the next three taxable years or until the total amount of the tax credit has been taken, whichever is sooner.
2. If the taxpayer claims a credit under subdivision B 2, if the taxpayer is a resident of Virginia and not a person to whom §58.1-303 applies, and if the amount of the credit exceeds the taxpayer's liability for such taxable year, the excess shall be refunded by the Tax Commissioner. Tax credits shall be refunded by the Tax Commissioner on behalf of the Commonwealth for 100 percent of face value. Tax credits shall be refunded within 90 days after the filing date of the income tax return on which the taxpayer applies for the refund.
F. 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.).
