1. (1) As used in this section:

   1. (a) "Adoption expense" means a reasonable and necessary adoption fee, court cost, attorney fee, or other expense that is:

      1. (i) directly related to, and for the primary purpose of, adoption of a qualifying child through a domestic adoption;
      2. (ii) not incurred in violation of federal or state law or in carrying out any surrogate parenting arrangement; and
      3. (iii) not paid or reimbursed by any employer or state assistance program.
   2. (b) "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.

   3. (c)

      1. (i) "Qualifying child" means an individual who is under 18 years old.
      2. (ii) "Qualifying child" does not include an individual who is a child of the claimant's spouse.

   4. (d) "Qualifying claimant" means a claimant:

      1. (i) whose adjusted gross income on a federal tax return is:

         1. (A) for a claimant who files the federal tax return jointly with the claimant's spouse, $55,000 or more but less than $110,000; or
         2. (B) for a claimant who files the federal tax return other than jointly, $27,500 or more but less than $55,000;
      2. (ii) who did not, and if the claimant is married, whose spouse did not, receive state or federal assistance during the taxable year in which the adoption is finalized; and
      3. (iii) who applies for and receives a certification described in Section 35A-1-111 from the Department of Workforce Services.

   5. (e)

      1. (i) "State or federal assistance" means public funds that are:

         1. (A) expended for the benefit of an individual in need of financial, medical, food, housing, or related assistance;
         2. (B) means tested; and
         3. (C) provided by a state or the federal government.

      2. (ii) "State or federal assistance" includes:

         1. (A) the Medicaid program, as defined in Section 26B-3-101;
         2. (B) the Employment Support Act described in Title 35A, Chapter 3, Employment Support Act;
         3. (C) the Children's Health Insurance Program created in Title 26B, Chapter 3, Part 9, Utah Children's Health Insurance Program;
         4. (D) the Supplemental Nutrition Assistance Program established in 7 U.S.C. Chapter 51, Supplemental Nutrition Assistance Program;
         5. (E) the Women, Infants, and Children Program established in 42 U.S.C. Sec. 1786;
         6. (F) the federal Social Security Act; and
         7. (G) housing assistance.
      3. (iii) "State or federal assistance" does not include an income tax credit, subtraction, or deduction.

2. (2) Subject to Section 59-10-1002.2, a qualifying claimant may claim, in the taxable year in which the adoption is finalized, a nonrefundable tax credit equal to the lesser of:

   1. (a) $3,500; or
   2. (b) the amount of the qualifying claimant's adoption expenses.
3. (3) A qualifying claimant may carry forward, to the next three taxable years, the amount of any tax credit that exceeds the qualifying claimant's tax liability for the taxable year.
4. (4) A qualifying claimant may not claim a credit under this section to the extent that the qualifying claimant claims a federal tax credit under 26 U.S.C. Sec. 23 for the same adoption expense.
5. (5) A qualifying claimant who is married may claim a tax credit under this section only if the qualifying claimant and the qualifying claimant's spouse file a joint federal income tax return.

Enacted by Chapter 460, 2023 General Session