What's Changing
Starting Jan. 1, 2027, the Childcare Choice and Backup Care programs will transition from a fiscal year schedule (July-June) to a calendar year schedule (January-December).
These changes align the program with tax reporting periods and other dependent care benefits, making it easier to plan and manage your childcare expenses.
Childcare Choice - Employee and Backup Care Program Transition Timeline
| Childcare Choice - Employee | Backup Care Program | |
|---|---|---|
| Now-June 2026 | Current fiscal year | Current fiscal year |
| Transition Period July-Dec. 2026 | $1,000 benefit only; Childcare Choice applications open Aug. 3, 2026 | 40 hours of benefits. Enroll once, any time. |
| Jan. 2027 onward | New calendar year program: $2,000 benefit; Childcare Choice applications open Jan. 4, 2027 | New calendar year program: 80 hours; Enroll at any time. |
| How to Access Benefits | Quarterly cost form submissions |
|
What This Means for You
Considerations for Dependent Care Flexible Savings Accounts
The Fall 2026 transition period could impact you if you are currently enrolled in the Dependent Care Flexible Savings Account (FSA). The IRS currently allows up to $7,500 per year in combined dependent care benefits, including your Dependent Care FSA contributions, Childcare Choice reimbursements, Backup Care usage, and any other dependent care benefits you receive. Please track your 2026 combined benefits carefully to ensure you don’t exceed $7500.
Frequently Asked Questions
This represents the prorated transition from fiscal year to calendar year. You're receiving a 6-month benefit ($1,000) for the 6-month period.
You'll continue submitting cost forms quarterly as usual. The total available for July-Dec. 2026 is $1,000.
Yes, consider your total 2026 dependent care benefits when deciding whether to submit before year-end or in January 2027.
Important: For IRS purposes, dependent care benefits are counted in the year you receive the reimbursement, not when you incur the expense. This means you can strategically time your Childcare Choice cost form submissions to determine which tax year the reimbursements are applied to, helping you stay within the annual $7,500 limit and avoid excess amounts being treated as taxable income.
All employer-provided dependent care benefits, including your Flexible Spending Account contributions, the $2,000 reimbursement, Backup Care Program usage, and any other dependent care benefits.
The IRS limits combined dependent care benefits to $7,500 per household ($3,750 for married filing separately). This includes your Dependent Care FSA, Childcare Choice reimbursements and Backup Care subsidies.
If you exceed this limit: The excess amount is no longer tax-free and becomes taxable income, including Backup Care subsidies. It will be reported on your W-2 and subject to federal and state income taxes, as well as FICA taxes (Social Security and Medicare). This means you may owe additional taxes when you file your tax return or see adjustments to your withholding.
We recommend consulting a tax professional for personalized advice on optimizing your dependent care elections and avoiding unexpected tax liability.
Yes, but the combined total cannot exceed the IRS limit.
Contact Us
Have questions about these resources?
Connect with the Life & Work Connections Team
Phone: 520-621-2493
Email: lifework@arizona.edu
Have questions about your benefits?
Connect with the HR Solutions team
hr.arizona.edu/contact-us