Transformational proposal would lay the foundation for a strong future for children and parents with tax credit, cash stipend for new parents, and child care improvements
LANSING, Mich. (March 12, 2025) — Today at a press conference joined by policy advocates and experts, Senate Democrats unveiled a bold, transformative proposal that would provide the “Building Blocks” Michigan needs to uplift working families and ensure they have a fair shot at a better quality of life for themselves and their children.
The plan takes a multi-angled approach to cutting the cost of parenting by:
- Providing a significant income boost to working families through a targeted Working Parents Tax Credit;
- Expanding Rx Kids statewide, a first-of-its-kind program that provides cash payments to new mothers and their babies; and
- Tackling the child care crisis from both the demand and supply side.
Cutting Taxes for Working Families
From diapers to daycare, the essentials are more expensive than ever due to inflation and skyrocketing child care costs. In the first year alone, raising a new baby costs more than $20,000, a staggering amount that is more than a third of an average U.S. family’s annual household income. To address the issue head-on and help families keep up with the rising cost of parenting, Sen. Kevin Hertel (D-St. Clair Shores) proposes a tax credit of $5,500 for working families with children under the age of three. The credit would be both easy to apply and qualify for, with eligibility based on the existing Earned Income Tax Credit.
“Parents need more than budgeting hacks — they need real solutions,” said Sen. Hertel. “With inflation on the rise and birth rates declining, it’s more important than ever to take steps to ease the financial stress associated with raising a child. Cutting taxes for parents would put more money in their pocket to afford necessities, plan for the future, and give their kids a better opportunity to succeed.”
“Parents work hard every day to provide for their families, but many still struggle to make ends meet,” said Alison Freas, President and CEO of The SOURCE. “Returning more of their hard-earned money back to parents would be life-changing for so many. The Working Parents Tax Credit would give families the support they need to keep up with rising costs, provide stability for their children, and cover unexpected costs.”
Improving Families’ Physical and Economic Health
Rx Kids is a first-of-its kind program here in the United States, initially launching in Flint, Michigan in October 2023, and is slated to expand to several more communities this year.
The program supports parents and babies by providing all pregnant moms in a community, regardless of income, with no-strings-attached cash of $1,500 during pregnancy and $500 each month throughout the baby’s first year. Research from Rx Kids and similar initiatives shows that universal child cash transfer programs are an innovative solution to poor health outcomes for children and child poverty, helping to increase housing security, bolster access to nutritious food, and improve maternal and child health.
“Raising a child — especially a newborn — has become unbearably expensive, turning a joyful time into a financial struggle for too many families,” said Sen. Sylvia Santana (D-Detroit). “Mothers across the state are planning, saving, and budgeting, yet still falling behind. They need more support, and this program would do just that. With Senate Democrats’ plan, we can expand Rx Kids statewide and give every family the building blocks to thrive.”
“From Flint to Kalamazoo to the Eastern Upper Peninsula, Rx Kids is efficiently and effectively improving family financial stability and health outcomes by putting money directly into the pockets of new moms and babies. Michigan is making history, and I’m so grateful for the leadership of Governor Whitmer and Senators Cherry and Santana in helping bring this life-changing program to life,” said Dr. Mona Hanna, Flint pediatrician and Michigan State University College of Human Medicine associate dean of public health. “I look forward to continuing to work with the Michigan Legislature to expand Rx Kids statewide so that every Michigan baby gets the strongest, healthiest start possible.”
Tackling the Child Care Crisis
In the last decade, Michigan has lost 40% of its child care capacity, a level twice that of the national average. Michigan currently ranks 39th in the nation for workforce participation, and the lack of child care is cited as the top reason young workers are choosing not to enter the workforce. As a result, the state loses out on an estimated $2.8 billion annually in the form of workforce productivity and economic gains.
To tackle this crisis, this plan would make child care more affordable for families and more sustainable for child care professionals and entrepreneurs by:
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Codifying the innovative bipartisan program, Tri-Share, that splits the cost of child care equally among employers, the state, and employees;
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Tying the Child Care Reimbursement Rate to inflation to provide certainty and consistency to providers; and
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Updating licensing requirements for child care centers and removing burdensome barriers to opening and operating centers.
“The rising costs of raising children has created an overwhelming burden on families,” said Sen. Mallory McMorrow (D-Royal Oak). “As the mom of a young daughter myself, I know what parents are going through — balancing it all with so much economic uncertainty — and we don’t have a minute to wait. It’s time we build our societal infrastructure to lower costs for families so you can focus less on worrying and more on parenting. This proposal is about giving families the support you need by tackling your most urgent issues — shrinking budgets, lack of child care, and rising rates of childhood poverty.”
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