New Mexico Can Lead Again with HB 106: From Child Care to Basic Income

By Shael Riley

A Family at a Crossroads

Imagine a young family in New Mexico trying to balance work and child-rearing. A mother weighs the cost of taking extra shifts against paying for daycare. A father juggles rent, groceries, and car repairs while wondering if one parent should just stay home. These are realistic decisions that thousands of New Mexican caregivers face every day. The message from these families is simple: the help that makes the most difference isn’t another complex program or voucher—it’s reliable cash support, because parents know best what their children need.

What HB 106 Would Do

House Bill 106 creates a “Home-Based Child Care Income Tax Credit” to put cash directly in the hands of families providing care at home. In plain terms, it would pay many New Mexico parents $1,000 per month per young child who isn’t in state or private daycare. Here are the key points of eligibility and design:

• Who qualifies: A taxpayer filing an NM individual return (not as someone else’s dependent) who has a dependent child age five or younger not enrolled in any state-funded or private child care or pre-K program. In other words, families who don’t use public or private daycare for their under-5 child can claim this credit.

• Benefit amount: $1,000 per month for each month the child isn’t yet eligible for kindergarten (essentially, for the pre-K years). This could total up to $12,000 a year per child.

• Key features: The credit is refundable, meaning if your credit is bigger than your tax bill, you get the rest as cash back. It’s also indexed to inflation starting in 2027 so its value keeps up with rising costs. The law would take effect for taxable years on or after January 1, 2026.

In short, HB 106 would recognize home-based caregiving as work – and pay families for it through the tax system.

HB 106 Embraces Basic Income Logic

Let’s be clear: HB 106 isn’t a full universal basic income, nor does it cover all ages. But it’s built on the same powerful principle as a UBI: provide cash with trust in families. The refundable tax credit structure matters here. Most tax credits only reduce what you owe in taxes, but a refundable credit turns into cash in your pocket even if you owe nothing. That means a family with little or no taxable income would still receive the full $1,000 per month per child as a payment. In effect, HB 106 creates a partial income floor for families with young children. And that flexibility is the point. Every family’s needs are different and often unpredictable—one month it’s covering an urgent car repair, the next it’s replacing a broken appliance or buying diapers and medicine. By giving support as cash, HB 106 lets parents address whatever expense is most pressing, without strings or bureaucratic approval. It trusts parents to know what their kids need, echoing the basic-income ethos that autonomy and financial stability go hand in hand.

The Problem in New Mexico: Child Poverty and Cost Pressure

New Mexico has some of the starkest child poverty in the nation, which is exactly why this policy is urgent. In 2023, about 22.6% of New Mexico’s children (over 100,000 kids) were living in families with incomes below the poverty line. Growing up in poverty is not just a statistic—it’s tied to real impacts on development and health. Early childhood poverty is associated with lower school performance and even worse health outcomes later on. The good news is that these outcomes aren’t destiny; they improve when families have more resources.

One major pressure on New Mexico families is the cost of child care. The typical annual cost of infant care in New Mexico is around $13,500, which is in the same ballpark as the $12,000 per year HB 106 would provide. In effect, raising a young child often forces an economic choice: pay the high price of daycare so both parents can work, or forgo income so one parent can stay home. It’s a bind that contributes to the state’s low workforce participation and financial stress on young families. Reducing child poverty will require easing this squeeze – which is exactly what a $1,000 per month child-care credit aims to do.

Why Cash Support Works

Direct cash is a proven engine for reducing hardship. When the federal government temporarily expanded the Child Tax Credit (CTC) in 2021 and started sending it as monthly checks, child poverty plummeted. To take one example: the very first monthly CTC payment kept 3 million children out of poverty in July 2021. Across that summer, each monthly payment was lifting 3–3.5 million kids above the poverty line who would have been below it otherwise. And when those payments expired, we saw the reverse: child poverty spiked by 41% in a single month, meaning 3.7 million children fell back into poverty in January 2022 after the checks stopped. The lesson is straightforward – when cash support arrived, hardship fell; when it was taken away, hardship rose sharply. Money in parents’ hands had an immediate anti-poverty effect.

Cash support also boosts early development and reduces toxic stress. Poverty in a child’s earliest years can undermine healthy brain development due to stress and lack of material resources. But giving low-income families extra money has shown measurable benefits for infants. In a landmark randomized study called Baby’s First Years, researchers gave one group of new mothers a monthly cash gift (unrestricted) and observed the outcomes. After one year, the infants whose families received the cash showed brain activity patterns associated with better learning and cognition. In simple terms, relieving financial strain for those parents appeared to help their babies’ brains develop in a more robust way. Reduced stress at home – thanks to even modest but steady cash – can mean a calmer, more nurturing environment for the child, which is crucial in those first few years of rapid brain growth.

Cash doesn’t make people quit working; it can actually improve how work works for them. There’s a persistent fear that giving people money will make them stop earning their own. Real-world evidence doesn’t back that up. One of the best examples is Alaska’s Permanent Fund Dividend, a modest basic income that every Alaskan gets each year (around $1,000–$2,000 from oil revenues). Studies of the Alaska dividend found no decrease in overall employment due to the cash transfers. In fact, the only notable labor market change was a small uptick in part-time work, suggesting some people used the financial cushion to cut back slightly on hours without dropping out of the workforce. Similarly, Finland’s 2017–2018 basic income experiment—where 2,000 unemployed adults got about $630 a month—showed no significant impact on employment, but significant improvements in health and life satisfaction for those who received the income. In other words, cash support can stabilize people’s lives (helping them cope with health needs, child care, etc.) without wrecking their work ethic. If anything, it gives families a bit more bargaining power: a parent who isn’t desperate for every dollar today might be able to seek a better job or negotiate for flexible hours, knowing there’s a baseline of support to fall back on. Far from “ending work,” a basic-income-style policy like HB 106 can enable better choices about work and family, to everyone’s benefit.

Fairness in New Mexico’s Policy Landscape

HB 106 also fills a fairness gap in New Mexico’s early childhood policy. New Mexico is on the verge of achieving universal child care access. Starting November 1, 2025, all income limits for child-care assistance will be removed, meaning any New Mexico family, regardless of earnings, can get free or subsidized care for their children if they use a licensed provider. This is a bold and nation-leading move – but it highlights an inequity. Under universal child care, the state will effectively pay for a daycare spot for any child. Yet what about families who decide to keep a young child at home? They would get no comparable support. HB 106 is designed to prevent that quiet unfairness: the idea that only families using formal child care “deserve” help. If the state is willing to invest in young children’s well-being via daycare subsidies, it should equally be willing to invest in those kids who are cared for at home by a parent or relative. It’s about recognizing all forms of care as valid. New Mexico led the way by making child care free; HB 106 says let’s also make sure at-home care is valued, too. It levels the playing field so that parents can truly choose what’s best for their situation without financial penalty.

Addressing Objections

Every bold policy will have its skeptics. Let’s tackle a few common objections to HB 106 head-on:

• Objection: “Won’t paying parents to stay home discourage them from using pre-K or child care programs?”
  Answer: HB 106 isn’t about steering families away from pre-K – it’s about funding the choice they are already making. Many New Mexico parents, for various personal and cultural reasons, choose to care for their young children at home. This credit simply stops penalizing those families for not using formal care. Public pre-K will still be available and attractive to many; HB 106 just ensures parents who go the home-care route get support too, instead of nothing.

• Objection: “If people get cash for staying home, won’t they stop working?”
  Answer: The evidence says otherwise. Broad cash dividends and income guarantees have not caused any mass exodus from the workforce. In Alaska, for example, the long-running annual cash dividend (a kind of mini–basic income) had no effect on overall employment levels. What a stable cash buffer can do is help families avoid crises, which actually helps them keep working in the long run. It’s hard to hold down a job when your car breaks down or you can’t afford child care—some extra income helps prevent those disruptions.

• Objection: “A refundable credit… isn’t that just welfare under another name?”
  Answer: It’s an earned recognition of caregiving labor. Just as the tax code provides credits for work, education, or saving for retirement, this credit compensates the work of raising a child at home. And because it’s delivered through the tax system, it comes with less stigma and red tape than traditional welfare programs. HB 106 treats parenting like the social contribution that it is – rewarding it rather than dismissing it.

• Objection: “HB 106 isn’t truly universal basic income, so why hype it up?”
  Answer: Because it’s a meaningful step in the right direction. No, a home-care credit for parents of young kids isn’t a UBI for everyone, but it’s a real-world pilot of the core idea. It will tangibly improve lives and demonstrate the power of cash support. If we praise and perfect these steps, we build momentum for broader income floors that can include everyone. In short, we have to start somewhere, and starting with families and children is a pretty good place.

Building a Basic Income Bridge – What Comes Next

Think of HB 106 as a bridge toward a more ambitious vision. If New Mexico can successfully send out $1,000 per month to families with little kids, why couldn’t we expand on that foundation? There are two big next steps to consider, even as we push HB 106 forward:

1. Make the payments periodic, not just annual. As written, the home-care credit would be claimed on a tax return, which typically means families get the money as a lump-sum refund the following year. Lawmakers should work on ways to deliver this support monthly or quarterly, so it aligns with real-time needs. Bills don’t wait until April, and neither should support. The federal government managed monthly checks with the CTC in 2021; New Mexico can explore doing the same with HB 106 through advance payments or a similar mechanism. Regular payments would make the “income floor” effect even stronger, helping families meet expenses as they arise.

2. Expand the credit into a true child allowance (and beyond). HB 106 is essentially a targeted child allowance for pre-kindergarten children in home-based care. In the future, New Mexico could consider extending a version of this credit to all young children, whether in home care or daycare – a universal child benefit. From there, one could imagine broadening eligibility beyond early childhood, inching closer to a bona fide basic income. The key is that HB 106 establishes the infrastructure and precedent: the state can send unrestricted cash support to its residents in a smart, targeted way. Once we see the benefits for families with little ones, it will be easier to make the case to widen the circle of beneficiaries.

Call to Action

New Mexico has a chance to lead the nation by passing HB 106. You can help make it happen. Here’s how:

• Support HB 106 publicly. Tell your state legislators that you back this home-based child care credit and why it matters. Share stories – your own or others’ – about the challenges of balancing work and child-rearing in New Mexico. Personal voices can cement the case that this policy addresses real needs.

• Push for smart implementation. Urge lawmakers not only to pass HB 106, but to consider provisions for monthly payment delivery and plans to expand the concept. Early input can shape how the credit is rolled out and improved over time.

• Join forces with advocates. Connect with local family policy and anti-poverty advocacy groups in New Mexico. Whether it’s attending a community meeting, signing a petition, or helping with an awareness campaign, collective action amplifies the message.

By taking these steps, New Mexicans can ensure HB 106 becomes law and set the stage for even bolder basic income policies in the future. It’s an opportunity to show, once again, that our state can lead with innovative solutions – proving that when we “pay families, not paperwork,” our whole community wins.

Works Cited:

1. New Mexico Legislature. "HB 106 (2026): Home-Based Child Care Income Tax Credit." https://www.nmlegis.gov/Sessions/26%20Regular/bills/house/HB0106.HTML

2. Internal Revenue Service. "Refundable tax credits." https://www.irs.gov/credits-deductions/individuals/refundable-tax-credits

3. New Mexico Department of Health, NM-IBIS. "Poverty Among Children Under Age 18." https://ibis.doh.nm.gov/indicator/summary/PopDemoChildPov.html

4. First Five Years Fund. "New Mexico." https://www.ffyf.org/states/new-mexico/

5. Center on Poverty and Social Policy (Columbia University). "Expanded Child Tax Credit continues to keep millions of children from poverty in September 2021." https://povertycenter.columbia.edu/publication/monthly-poverty-september-2021

6. Food Research & Action Center (FRAC). "Expanded Child Tax Credits: Research Brief" (PDF). https://frac.org/wp-content/uploads/Expanded-Child-Tax-Credits-Research-Brief.pdf

7. Teachers College, Columbia University. "Baby's First Years: Early Findings Support Link Between Increased Income and Infant Brain Development." https://www.tc.columbia.edu/articles/2022/january/baby-first-years-findings/

8. Jones, Damon, and Ioana Marinescu. "The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund." American Economic Journal: Economic Policy (American Economic Association). https://www.aeaweb.org/articles?id=10.1257/pol.20190299

9. European Commission. "First results from the Finnish basic income experiment" (PDF). https://ec.europa.eu/social/BlobServlet?docId=20846&langId=en

10. Fiscal Policy Institute. "How New Mexico Will Pay for Universal Childcare." https://fiscalpolicy.org/how-new-mexico-will-pay-for-universal-childcare