Senate Dems Hope For Caregiver, Children's Tax Credits Amid Fading Revenue

(Source: MIRS.news, Published 05/16/2025) In the same week that state revenue projections are slightly lower than what they were in January, Senate Democrats are hoping conversations can still be had around proposed tax credits for unpaid family caregivers and families with infants and toddlers.

On Wednesday, the Democratic-led Senate passed their $85.95 billion proposed budget for the next fiscal year, setting aside $30 million from Michigan's General Fund to begin negotiations on creating a "Caregiver Tax Credit."

In an interview that will be featured on this week’s MIRS Monday Podcast episode, Senate Appropriations Chair Sarah Anthony (D-Lansing) explained the proposal was brought forward by the Governor last term. Last year, Gov. Gretchen Whitmer introduced the "MI Family Tax Credit," aiming to offset family caregiving expenses related to transportation, in-home respite services and counseling sessions.

The Whitmer proposal looked to offer up to $5,000 as a tax credit to "thousands of families."

The idea is one advocated heavily by the AARP Michigan, which reported in September 2023 that six states in the country offered tax credits affiliated with out-of-pocket caregiver costs. The retiree-focused organization posted that, on average, family caregivers spend $7,242 on such expenses, which Michigan has faced a 10 percent decline in access to home health aides since 2019.

The day after the Senate finished voting on its budget plan, Senate Democrats dropped the bill numbers for its "Building Blocks" legislation. In the package, SB 308 by Sen. Kevin Hertel (D-St. Clair Shores) provides a $5,500 tax credit for children 4 years old and under, available to households earning no more than 150 percent of the state's median income.

The Hertel bill follows the same state median incomes set by the federal Low Income Home Energy Assistance program (LIHEAP), which defined Michigan's as $111,699 yearly for a family of four. Based on the FY '25 numbers, 150 percent of that would be around $167,548.

Under SB 308 , families who utilize the RX Kids welfare program in that same tax year, which gives cash payments during pregnancy and the first year of a child's life, could not qualify. The legislation looks to distribute the tax credit in the form of monthly payments.

"A part of what we have tried to do is build a budget that actually lowers costs for people, whether you're a low-income resident or folks who are middle-income, but because of the rising cost of everything, it feels as if you're still not making enough money just to make ends meet," Anthony said to MIRS. "The name of the game is that if we want people not only just to live in Michigan, but actually thrive, we have to do more to . . . make it more affordable."

She noted there are people around her age both raising kids and caring for an ailing or aging relative. Anthony said they're excited to begin working with House Republicans and the Governor to start figuring out the details about what relief would look like and who would qualify.

But at the same time, tax credits mean reductions to Michigan's General Fund tax revenue earnings. Last year, former state Sen. Kristen Mcdonald Rivet (D-Bay City), now a U.S. House member, proposed a $5,500 tax credit for children 3 and younger. It was limited to families considered as working poor, already qualifying for the Earned Income Tax Credit (EITC).

In the 2024 tax credit, a couple with two children received the EITC if they made no more than $62,688 each year jointly. The bill had a projected fiscal impact of between $900 million and $1.1 billion in General Fund revenue that would not come in.

At the same time, during Friday’s Consensus Revenue Estimating Conference (CREC), Michigan is already anticipated to see $136 million less in General Fund and School Aid Fund (SAF) revenue than what was projected in January.

"Obviously, our revenues are down from January, which I think a lot of that is to be expected given so many chaotic policies (and) executive orders that have come from the federal level," Anthony said. "We are seeing consumer confidence go down because of so much uncertainty, and so we could have anticipated revenues going down anyway . . . this is just the evidence of what we've seen, which is a lot of chaos the last couple of months."