Ann Arbor received $24.1million from the American Rescue Plan Act, and will allocate $1.6million of that funding toward this pilot.
Selected families will receive $18,000 over three years.
According to the proposal, there are no restrictions on how families can use the money.
The city council has yet to determine when the pilot will launch, but will announce details of the program once it's been finalized.
"In the coming months, the city will work with community partners to identify program criteria and application details," Lisa Wondrash, Ann Arbor City Council communications manager told The Sun via email.
Councilmember Linh Song, who began advocating for a guaranteed income program last year, celebrated the program's approval on Twitter.
"I’m thinking of my refugee parents & how extra cash would have made the difference between a safe and unsafe apartment, a car repair, or ER visit for my asthmatic sister," she tweeted.
"I’ll never forget the stress of poverty. We should want relief for all."
Guaranteed income inspiration
The pilot program is based on a similar one conducted in Stockton, California.
After the first year, it was reported that residents experienced less depression and anxiety compared to the control group which did not receive payments.
To stay up to date with guaranteed income programs across the country, check out The Sun's live blog.