Are there income limitations for the Adoption Credit?

The Adoption Credit indeed features income limitations, specifically in the form of a phase-out threshold for taxpayers with modified adjusted gross income (MAGI) that exceeds a certain level. This means that as a taxpayer's income rises above this designated amount, the credit amount begins to decrease gradually until it reaches zero for those with MAGI above a higher specified limit.

This is designed to ensure that the credit primarily assists those with lower to moderate incomes who might benefit more significantly from the financial assistance in adopting a child. The established thresholds are adjusted annually based on inflation, which aligns the program with current economic factors and helps target the benefit to those it is intended to help most.

The other options suggest either the absence of any income limitations, the credit being limited only to high-income or low-income individuals, which misrepresents the structure of the Adoption Credit. In reality, it aims to support a broader range of taxpayers by imposing a moderate income threshold rather than restricting it too narrowly based on income.