Yes, grandparents can get money for adopting their grandchildren, and often from more than one source at the same time. The largest ongoing payment is usually monthly adoption assistance under the federal Title IV-E program, negotiated before the adoption is finalized. On top of that, most adopted grandchildren qualify automatically for Medicaid, and the grandparents can claim a federal adoption tax credit worth up to $17,280 per child for 2025, the Child Tax Credit each year the child qualifies, and in some cases Social Security auxiliary benefits on the grandparent’s earnings record.
Monthly Adoption Assistance Payments
The main source of continuing financial support is the Title IV-E adoption assistance program. Every state must enter into adoption assistance agreements with parents who adopt children classified as having “special needs.”1Social Security Administration. Social Security Act 473 Under those agreements, the state makes monthly payments to help cover the child’s living costs. The amount is negotiated between the family and the placing agency.
“Special needs” is broader than it sounds. A child doesn’t need a medical diagnosis to qualify. States can designate a child as special needs based on age, membership in a sibling group, ethnic or racial background, or a history of abuse or neglect. Criteria vary by state, but if the child was in foster care there’s a good chance they qualify.
The monthly amount is negotiated based on the child’s specific needs and the family’s circumstances, including the family’s ability to absorb additional costs. Payments are meant to offset expenses tied to the child’s care, such as therapy, child care, or specialized activities. The negotiation also takes into account other resources the child may receive, like Supplemental Security Income. Amounts vary widely across states, and the payment generally cannot exceed what the child would have received in foster care maintenance. Grandparents who bring documentation of medical records, therapy costs, and educational needs to the negotiation tend to secure more appropriate payment levels.
One point trips families up more than any other: the adoption assistance agreement must be signed before the adoption is finalized. Grandparents who complete the adoption first and then try to apply often discover they’ve permanently lost eligibility for monthly payments. Getting legal help before the final hearing is worth the cost for this reason alone.
Reimbursement for One-Time Adoption Costs
Separate from the monthly payments, federal law requires states to reimburse adoptive parents for nonrecurring adoption expenses when adopting a child with special needs. These cover court costs, attorney fees, the home study, and travel expenses related to completing the adoption. The federal government reimburses states up to $2,000 per adoption, though individual states may cap their reimbursement at or below that amount.2ACF Children’s Bureau. Title IV-E Adoption Assistance Program – Non-recurring Adoption Expenses
Automatic Medicaid Coverage for the Child
Children receiving Title IV-E adoption assistance are automatically eligible for Medicaid, with no income or resource test. The state cannot require a separate Medicaid application; the child must be enrolled promptly based on the Title IV-E agency’s determination alone.3Medicaid.gov. Implementation Guide – Children with Title IV-E Adoption Assistance, Foster Care or Guardianship Care This eligibility holds even when a family isn’t currently receiving monthly payments, as long as an adoption assistance agreement is in place.
For grandparents on fixed incomes, this often matters more than the cash payment. Medical coverage for a child who has experienced trauma or neglect can run into thousands of dollars a year in therapy and behavioral health services alone. Medicaid covers mental health services, prescriptions, hospitalizations, and routine care.
Federal Adoption Tax Credit
The federal adoption tax credit helps offset the upfront costs of adopting. For 2025, grandparents can claim up to $17,280 per child in qualified adoption expenses, including attorney fees, court costs, travel, and the home study.4Internal Revenue Service. Adoption Credit The maximum is adjusted annually for inflation.
A significant change took effect in 2025: up to $5,000 of the credit is now refundable. Grandparents who owe little or no federal income tax can receive that portion back as a cash refund. The remainder is non-refundable but can be carried forward for up to five years. Any unused non-refundable credit after five years is forfeited.5Internal Revenue Service. Instructions for Form 8839 (2025)
The credit phases out at higher incomes. For 2025, the full credit is available if modified adjusted gross income is $259,190 or less. It reduces gradually between $259,191 and $299,189, and disappears entirely at $299,190 or above.4Internal Revenue Service. Adoption Credit For most grandparents, income won’t be the issue. The credit is claimed on Form 8839, filed with your federal tax return.5Internal Revenue Service. Instructions for Form 8839 (2025)
Some states offer their own adoption tax credits or deductions on top of the federal one. Structures differ, with some providing a flat credit and others tying it to actual expenses. A tax professional familiar with your state can identify what applies.
Employer Adoption Benefits
Grandparents who are still working may have adoption assistance through their employer. Under federal tax law, an employee can exclude up to $17,280 (2025) from gross income if the employer pays qualified adoption expenses through a written adoption assistance program.4Internal Revenue Service. Adoption Credit The exclusion is separate from the adoption tax credit, but the same expenses cannot be used for both. If your employer covers some costs and you pay others out of pocket, you can potentially use the exclusion for the employer-paid portion and the credit for your own expenses, up to the per-child limit for each. The same income phase-out thresholds apply, and the dollar limits are adjusted annually for inflation.6Office of the Law Revision Counsel. 26 USC 137 – Adoption Assistance Programs
Child Tax Credit Each Year
Once the adoption is finalized, grandparents can claim the Child Tax Credit for each adopted grandchild. For 2025, the credit is worth up to $2,200 per qualifying child under age 17.7Internal Revenue Service. Child Tax Credit An adopted grandchild qualifies as long as they have a Social Security number, live with you for more than half the year, are claimed as your dependent, and don’t provide more than half of their own support.
The full credit is available to filers with annual income up to $200,000, or $400,000 for married couples filing jointly. Grandparents with little or no tax liability may qualify for the Additional Child Tax Credit, which provides a refundable portion of up to $1,700 per child based on earned income.7Internal Revenue Service. Child Tax Credit Unlike the adoption tax credit, this one is claimed every year the child qualifies.
Social Security Benefits on the Grandparent’s Record
An adopted grandchild may qualify for Social Security benefits on the grandparent’s earnings record. If the grandparent is receiving retirement or disability benefits, a dependent child can receive up to 50% of the grandparent’s full benefit amount. If the grandparent dies, the child can receive survivor benefits worth up to 75% of the grandparent’s basic benefit.8Social Security Administration. Benefits for Children
A family maximum caps total benefits paid on one worker’s record at 150% to 180% of the worker’s full benefit. When multiple family members are collecting on the same record, each person’s payment may be reduced to stay within that cap.8Social Security Administration. Benefits for Children
To qualify, the adopted child must be unmarried and either under 18, a full-time student in elementary or secondary school (up to age 19), or have a qualifying disability that began before age 22.9Social Security Administration. Retirement Benefits If you adopt after you’ve already started collecting Social Security, notify the SSA so the child’s eligibility can be evaluated.
College Aid and Tuition Waivers Later
Adoption can affect a grandchild’s access to college aid, sometimes favorably. On the FAFSA, a student who was in foster care at any point after turning 13 is typically classified as an independent student, even if they were later adopted. Independent status means only the student’s own income and assets count, not the grandparent’s, which often produces significantly larger aid packages, including bigger Pell Grants.
Young people adopted from foster care at age 16 or older may also qualify for Education and Training Vouchers through the federal Chafee program, worth up to $5,000 per academic year toward college or vocational training.10Federal Student Aid. Educational and Training Vouchers for Current and Former Foster Youth
Roughly half the states offer tuition waivers at public colleges and universities for children adopted from foster care. Waivers usually cover tuition and fees at state schools, though eligibility varies. Students generally must file the FAFSA, maintain satisfactory academic progress, and meet age limits set by the state. Your state’s child welfare agency or public university system can tell you what’s available locally.