The IRS now allows a federal tax credit for as much as $11,650 for the costs of some adoptions. The credit is a dollar for dollar reduction in your federal income tax (i.e., if your normal income tax would be $10,000, you would reduce that amount by $10,000). The 2008 adoption tax credit is $11,650. The credit begins to phase out with a modified adjusted gross income of $174,730 and is completed phased out at a modified adjusted gross income of $214,730 or more. For more information, speak to your accountant or other tax professional to see how this credit may affect you.