Adoption Promotion Act of 1996

Adoption Promotion Act of 1996 - Amends the Internal Revenue Code to allow an individual a tax credit of up to $5,000 for qualified adoption expenses paid or incurred during the taxable year. Provides a limitation based on modified adjusted gross income. Permits unused credit to be carried forward to the succeeding taxable year on a first-in first-out basis, but prohibits carrying forward credit to any taxable year following the fifth taxable year after the taxable year in which the credit arose.

Allows distributions from an individual retirement plan to be used without penalty to pay for adoption expenses.

Excludes from gross income aggregate amounts of up to $5,000 ($7,500 in the case of a child with special needs) paid or expenses incurred by the employee for qualified adoption expenses in connection with the adoption of a child if such amounts are received under an employer's adoption assistance program. Provides a limitation based on modified adjusted gross income.