2026 Pilot Pending (SB 1224)
Arizona Child Care Cost-Sharing & Tax Credits
Arizona is on the verge of launching a statewide Tri-Share pilot. In the meantime, employers can stack theFederal 45F CreditwithBright Futures AZgrants for up to90% savingson child care costs.
2026
Program Year
Active
Program Status
45F
Federal Credit Available
All
Employers Eligible
⚖️ How the Cost Split Works
Employer Pays
~33%
of total tuition
Arizona Pays
~33%
state match
Parent Pays
~33%
of total tuition
📊 The Arizona Savings Stack
Stack available Arizona programs with the Federal 45F Tax Credit for maximum employer savings.
| Benefit Layer | Small Business (<$32M) | Large Business |
|---|---|---|
| State Program Benefit | Varies by program | Varies by program |
| Federal 45F Credit (2026) | 50% Tax Credit | 40% Tax Credit |
| Net Employer Cost | Significantly Reduced | Significantly Reduced |
💰 Real-World Employer Savings
| Cost Component | Without Program | With State + 45F Stack |
|---|---|---|
| Annual child care cost (per employee) | $12,000 | $12,000 |
| State Program Benefit | $0 | Varies |
| Employee Share | $0 | Reduced |
| Employer Share | $12,000 | Reduced |
| Federal 45F Credit (50% of employer share) | $0 | Significant savings |
| Net Employer Cost | $12,000 | Significantly Lower |
📋 All Available Programs
Federal 45F Tax Credit
Federal Tax Credit
Up to $600,000/year
All U.S. employers
Duo-Share Program
Employer-Employee Split
Flexible cost sharing
All employers — no state required
📍 Geographic Coverage
Major Cities Served
County Coverage
All 15 Arizona counties are eligible for Bright Futures AZ grants and the pending SB 1224 pilot. Priority areas include Maricopa, Pima, and Yuma counties.
❓ Frequently Asked Questions
A Tri-Share pilot (SB 1224) is currently moving through the Arizona Legislature as of early 2026. If passed, it would establish a statewide Tri-Share Child Care Pilot Program modeled after Michigan's successful program, with an approximately one-third cost split between the State, Employer, and Parent. In the meantime, Arizona employers can use the Federal 45F Credit and Bright Futures AZ grants to create a de facto cost-sharing arrangement.
Introduced onJanuary 20, 2026, SB 1224 is theTri-Share Child Care Pilot Act. It proposes an approximately one-third cost split between the State, Employer, and Parent, similar to models in Michigan and North Carolina. The bill is currently in committee and would create a formal pilot program if enacted.
Launched in February 2026,Bright Futures AZis a $3 million pilot program that specifically helps families with children ages 5–12 cover child care costs when school is out. It can cut child care expenses bytwo-thirdsfor participating families, making it a powerful complement to employer-sponsored programs for school-age children.
Under the expanded Federal Section 45F Credit (effective January 2026), Arizona employers can claim up to50% of qualified child care expendituresas a tax credit — up to $600,000 per year for small businesses. This is the single largest employer child care incentive available in Arizona today and does not require state legislation.
A Phoenix employer offering a $15,964 annual infant care benefit can reduce their net cost to approximately$1,591by stacking the Federal 45F Credit (50%), Bright Futures AZ grants, and a Duo-Share split — a savings of nearly90%.
In February 2026, Governor Hobbs released an additional600 childrenfrom the child care waitlist, specifically targeting working families. However, thousands remain on the waitlist, making employer-sponsored programs critical for workforce stability.
First Things Firstis Arizona's early childhood development agency, funded by tobacco tax revenue. It invests in quality child care, health screenings, and family support programs across all28 regional partnership councilsstatewide. They also support employer child care navigation resources to help businesses connect with quality providers.
📚 References & Sources
Last Updated: March 1, 2026
📋 Available Programs & Incentives
Bright Futures AZ Employer Grant
State Grant
Up to $3M available — competitive grants
Eligibility: Arizona employers with 500+ employees
SB 1224 Tri-Share Pilot (Pending)
Pending Legislation
Employer/State/Employee cost split
Eligibility: Pending — introduced January 20, 2026
Federal Section 45F Credit
Federal Tax Credit
Up to 50% of employer costs (max $600K/yr)
Eligibility: All U.S. employers with qualifying child care expenses
Arizona Child Care Assistance Program
State Subsidy
Sliding-scale co-pay
Eligibility: Families at or below 85% SMI
Quality First Scholarships
State Program
Child care quality improvement grants
Eligibility: Licensed providers in Maricopa, Pima, Yuma counties
Duo-Share (Employer + Employee)
Employer Benefit
Flexible split — employer covers 25–75%
Eligibility: Any Arizona employer, no state program required
❓ Frequently Asked Questions
SB 1224 is a Tri-Share pilot bill introduced January 20, 2026 that would create an employer/state/employee cost-sharing model similar to Michigan's. The bill is currently in committee. Contact your state representative to show support.
Bright Futures AZ is a $3M competitive grant program for Arizona employers with 500+ employees who want to provide child care benefits. Grants help offset the cost of establishing or expanding employer-sponsored child care.
Yes — all Arizona employers can claim the Federal Section 45F Credit regardless of state program status. This covers up to 50% of employer child care contributions, up to $600,000 per year.
Phoenix, Tucson, and Scottsdale have the most employer participation. Maricopa and Pima counties are priority areas for Bright Futures AZ grants and Quality First scholarships.
Governor Hobbs released 600 children from the child care subsidy waitlist in 2025. However, demand still far exceeds supply. The pending SB 1224 would help address this gap by bringing employer dollars into the system.
Not yet — SB 1224 is pending. In the meantime, Arizona employers can use a Duo-Share model (employer/employee split) and stack with the Federal 45F Credit for significant savings. Contact us for a consultation.
Contact the Arizona Department of Economic Security (DES) at des.az.gov or the First Things First regional office for your area. Grants are competitive and awarded annually.