Foster parents receive tax-free reimbursements for each child in their care. Reimbursement eligibility and amounts vary by state and child's age. For example, foster parents in California are entitled to reimbursement for basic expenses, clothing, recreation and education, according to the Southern California Foster Family and Adoption Agency.
Parents of children with special medical or emotional needs are reimbursed at a higher rate. The Oregon Department of Human Services offers three levels of reimbursement to reduce the burden on families with special needs children. Other reimbursements are typically available for incidental expenses such as clothing, school supplies, books, holidays and birthdays.