(

a) For each taxable year beginning on or after January 1, 1994, there shall be allowed as a credit against the “net tax,” as defined in

Section 17039, an amount equal to percent of the costs paid or incurred by a taxpayer for the adoption of any minor child who is a citizen or legal resident of the United States and was in the custody of a public agency of either this state or a political subdivision of this state. The credit shall not exceed two thousand five hundred dollars ($2,500) per minor child. (b) “Costs” eligible for the credit pursuant to subdivision (

a) shall include the following:

(1) Fees for required services of either the Department of Social Services or a licensed adoption agency.

(2) Travel and related expenses for the adoptive family that are directly related to the adoption process.

(3) Medical fees and expenses that are not reimbursed by insurance and are directly related to the adoption process. (

c) The credit authorized by this

section shall be claimed for the taxable year in which the decree or order of adoption is entered pursuant to

Section of the Family Code. However, the allowable credit claimed may include any costs of that adoption paid or incurred in any prior taxable year. (

d) In the case where the credit allowed by this

section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following year, and succeeding years if necessary, until the total credit of two thousand five hundred dollars ($2,500) per minor child is exhausted. (

e) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.