Paid surrogacy is legal in most of the United States, but whether a specific arrangement holds up depends on the state where the surrogate gives birth, not where the intended parents live. More than half of all states expressly authorize compensated gestational surrogacy by statute, several joining that group in 2025 and 2026. A handful of states still restrict commercial arrangements or have no statute at all, which leaves enforceability to a judge’s reading of general family law.
Why State Law Decides Everything
Congress has not passed any legislation that permits, prohibits, or regulates surrogacy agreements, and no federal agency oversees surrogacy contracts or agencies. Family law is a state matter, so each state sets its own rules on who can be a surrogate, how much she can be paid, and how the intended parents become the child’s legal parents.
The state where the surrogate gives birth almost always controls which laws apply. Intended parents in a permissive state who hire a surrogate in a restrictive state are governed by the restrictive state’s rules. Geography drives nearly every legal decision in a surrogacy arrangement, from contract enforceability to how the birth certificate is issued.
How States Treat Paid Surrogacy
State laws fall into three broad groups: expressly permissive, restrictive, and silent.
Permissive States
A growing majority of states have statutes that authorize compensated gestational surrogacy and set out requirements for an enforceable contract. California was an early leader, and its law treats surrogacy agreements as presumptively valid when both parties have independent legal counsel and the contract is signed before any medical procedure begins.1California Legislative Information. California Family Code Division 12, Part 7 New York legalized gestational surrogacy in February 2021 through the Child-Parent Security Act, which requires surrogacy organizations to be licensed by the state health department and includes protections for both surrogates and intended parents.2New York State Department of Health. The New York State Child-Parent Security Act: Gestational Surrogacy Other states with clear permissive statutes include Colorado, Connecticut, Delaware, Florida, Illinois, Maine, Maryland, Nevada, New Hampshire, New Jersey, Texas, Vermont, and Washington.
Michigan is a recent example of how fast this picture is changing. For decades it operated under the Surrogate Parenting Act of 1988, which declared surrogacy contracts contrary to public policy and imposed criminal penalties for arranging commercial surrogacy.3Michigan Legislature. Michigan Code Act 199 of 1988 – Surrogate Parenting Act As of April 1, 2025, Michigan replaced that law with the Assisted Reproduction and Surrogacy Parentage Act, making gestational surrogacy agreements enforceable. Hawaii followed with a statute that took effect January 1, 2026.
Restrictive States
A small number of states still limit paid surrogacy. Louisiana permits gestational surrogacy agreements only when the intended parents are married to each other and the embryo is created using both of their own eggs and sperm. That rule effectively bars single intended parents, unmarried couples, and anyone who needs a donor egg or donor sperm from using surrogacy inside Louisiana.
States with active restrictions tend to view commercial surrogacy as too close to paying a biological parent for a child. Their laws either void compensated contracts entirely or enforce them only in narrow circumstances. Intended parents in these states commonly travel to a permissive jurisdiction for the process.
States Without a Statute
Some states have no surrogacy statute at all. In those jurisdictions, legality turns on how a local judge interprets existing family law, contract law, and case precedent. A contract that one judge upholds, another might refuse to enforce. Most surrogacy professionals steer clients toward states with established statutory frameworks because the outcome is more predictable.
Gestational and Traditional Surrogacy Are Not Treated the Same
When people ask whether paid surrogacy is legal, they almost always mean gestational surrogacy, in which the embryo is created through in vitro fertilization and the surrogate contributes no genetic material. Because she is not biologically related to the child, courts in permissive states treat the arrangement as a contractual service. This is the model used in the vast majority of commercial surrogacy in the United States.
Traditional surrogacy, in which the surrogate uses her own egg, is a different legal question. The genetic link makes her the child’s biological mother, and many states treat the arrangement like an adoption, requiring her to formally relinquish parental rights after birth. Paying a biological parent to give up a child can trigger adoption-law prohibitions on exchanging money for a child. Compensated traditional surrogacy is legal in far fewer states, and most surrogacy attorneys and agencies decline to handle it.
What a Paid Arrangement Has to Include
In states that permit compensated gestational surrogacy, the written contract is the foundation of the arrangement, and in most of those states it will not be enforceable unless both the surrogate and the intended parents have their own independent attorneys review and negotiate it before anyone signs.
The contract spells out compensation. First-time surrogates currently receive roughly $45,000 to $55,000 in base pay, with experienced surrogates earning more. On top of base pay, contracts typically include monthly allowances for incidental costs, reimbursement for maternity clothing, and coverage for lost wages if the surrogate’s doctor restricts her work. The agreement also addresses behavioral expectations during pregnancy, health insurance arrangements, and scenarios like multiples, bed rest, or complications.
Surrogacy funds are almost always held by an independent escrow agent rather than paid directly from the intended parents to the surrogate. The escrow account is funded before the first embryo transfer, and payments are released on a schedule set out in the contract.4Academy of Adoption & Assisted Reproduction Attorneys. Financial Terms and Escrow Accounts Most contracts also require the intended parents to buy a life insurance policy on the surrogate, typically between $350,000 and $600,000, active from around the six-week pregnancy confirmation until roughly 60 days after delivery.
Becoming the Legal Parents
A signed surrogacy contract does not by itself make the intended parents the child’s legal parents. A court order is required, and the route depends on which state’s laws apply.
Pre-Birth Orders
In the most surrogacy-friendly states, intended parents can petition for a pre-birth parentage order during the pregnancy, often in the second trimester. A judge reviews the surrogacy agreement and issues an order declaring the intended parents the child’s legal parents. The hospital receives a copy before delivery, and the birth certificate lists the intended parents from the start.
Post-Birth Orders
In states that don’t allow pre-birth orders, the intended parents petition shortly after the child is born. The order establishes them as the legal parents and directs the state to issue a corrected birth certificate. During the gap between birth and the court order, the intended parents still take physical custody of the child, and the surrogate can sign a health care power of attorney so the intended parents make all medical decisions for the newborn.5Academy of Adoption & Assisted Reproduction Attorneys. Parentage Proceedings
Second-Parent Adoption
When only one intended parent is genetically related to the child, some states grant a parentage order only for that genetic parent. The non-genetic parent then has to complete a second-parent or stepparent adoption to secure their legal rights. Same-sex couples, by definition, have one parent with no genetic tie to the child, and several states still require that parent to go through an adoption proceeding even with a valid surrogacy contract in place. The process adds time, legal fees, and uncertainty that couples with both genetic parents don’t face. Even where adoption isn’t strictly required, some attorneys recommend a confirmatory adoption as added protection if the family travels or relocates across state lines.
Tax Treatment of the Payment
Because the arrangement is paid, taxes come into play on both sides, and most people are caught off guard by at least one of the rules.
The IRS treats a surrogate’s base compensation as taxable income. A surrogate who earns $50,000 in base pay owes federal income tax on that amount, plus self-employment tax if she is not classified as an employee, which she almost never is. For tax year 2026, any payer who pays $2,000 or more in nonemployee compensation must report it on Form 1099-NEC and furnish a copy to the surrogate by January 31.6Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns – 2026 Returns That $2,000 threshold is new for 2026, up from the prior $600 floor. Reimbursements for actual pregnancy-related expenses like medical copays and maternity clothing are generally not taxable, so the contract should draw a clear line between reimbursement and compensation.
Intended parents cannot deduct surrogacy costs. IRS Publication 502 states that amounts paid for the identification, compensation, and medical care of a gestational surrogate are not includible as medical expenses because they are paid for the care of an unrelated third party, not the taxpayer or the taxpayer’s dependent.7Internal Revenue Service. Publication 502 – Medical and Dental Expenses The IRS reinforced this position in a 2025 determination letter that denied a medical deduction for all surrogacy-related expenses, including the surrogate’s medical care, insurance, and compensation. Intended parents who undergo their own IVF procedures can deduct those personal medical costs, but nothing paid to or on behalf of the surrogate qualifies.