De-link adoption assistance from Aid to Families with Dependent Children (Sec. 402)

Under previous law, states could only claim reimbursement for special needs children adopted from foster care who met Title IV-E income eligibility standards (i.e., children who were removed from the home of parents whose income would have made them eligible for AFDC in 1996).  The Act removed this requirement, and thus states, over time, can seek reimbursement for adoption assistance payments made on behalf of all special needs children who meet other IV-E eligibility requirements.  The phase-in of the de-linking eligibility provision begins 10/09 for special needs children age 16 or older, and for children who have been in foster care for 60 consecutive months (5 years) or are or are a sibling to a child who is eligible due to his age or length in foster care.  The phase-in spans nine years and will be complete on September 30, 2018.  The Act requires that savings resulting from these new Title IV-E eligibility rules must be invested in services (including post-adoption services) provided under Parts B and E of Title IV.

Extension/expansion of adoption incentives (Sec 401)

The Act renews the Adoption Incentives Program for five years, updates to FY 2007 the baseline for determination of incentive payments, increases the level of the incentive payments for adoptions of children with special needs and older children adoptions, and gives states 24 months to use the incentive payments.  In addition, states may receive additional payments if their adoption "rate" exceeds the highest ever previously recorded since 2002.  The Act defines the adoption "rate" as the number of foster care adoptions finalized during the fiscal year divided by the number of children in foster care on the last day of the preceding fiscal year.

Informing parents of the adoption tax credit (Sec. 403)

In 2004, it appears that taxpayers claimed the tax credit for less than one in four foster children adopted, even though all were eligible to receive the credit. Addressing this issue, the Act requires states to inform any individual who is adopting, or whom the state is made aware is considering adopting, a foster child of their eligibility for the adoption tax credit.