Form 1040

1f — Employer-Provided Adoption Benefits Updated for tax year 2025

What this line means

The taxable portion of adoption benefits your employer paid or reimbursed. Employers can provide up to $17,280 (2025) in tax-free adoption assistance, but that exclusion phases out at higher incomes. Any amount above the exclusion limit — or above what your income phase-out allows — is taxable and goes here.

Does this apply to you?

  • You received adoption assistance from your employer and your AGI is above the phase-out threshold
  • Your employer-provided adoption benefits exceeded the $17,280 annual exclusion limit
  • You adopted a child and your employer reimbursed expenses that included non-qualifying costs
  • You received adoption benefits shown in W-2 Box 12, Code T

Easy to overlook

The AGI phase-out can make otherwise excludable benefits taxable The exclusion for employer-provided adoption benefits starts phasing out at $259,190 AGI and is completely eliminated at $299,190 (2025). If your household income is in this range, a portion of the benefits your employer provided becomes taxable even if the total is under $17,280. Many filers at these income levels assume the full amount is excluded. 1 [SOURCE: IRS Publication 968 — Tax Benefits for Adoption]

W-2 Box 12 Code T does not mean the amount is tax-free Box 12 Code T reports the total employer-provided adoption benefits — not just the excludable portion. Filers sometimes see this amount and assume it is all pre-tax. You must complete Form 8839 to calculate how much is actually excludable based on your AGI and qualifying expenses. 2 [SOURCE: General filing pattern — adoption benefit AGI phase-out]

Watch out for this

Not filing Form 8839 when you received adoption benefits. The form is required to calculate the excludable amount regardless of whether you also claim the adoption credit. Without Form 8839, the IRS has no basis to verify your exclusion and will treat the entire Box 12 Code T amount as taxable income.

  • Line 1a — Form 1040 — W-2 wages; taxable adoption benefits are added separately
  • Line 1z — Form 1040 — Total wages; includes any taxable employer adoption benefit amount
  • Form 8839 — Qualified Adoption Expenses — required to calculate the exclusion and any adoption credit

Footnotes

  1. IRS Publication 968, Tax Benefits for Adoption. https://www.irs.gov/pub/irs-pdf/p968.pdf ↩

  2. IRS Form 1040 Instructions. See also IRS Publication 17, Your Federal Income Tax. https://www.irs.gov/pub/irs-pdf/p17.pdf ↩

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