Last updated: May 3, 2026

How to Start a Daycare in Arizona (2026)

Three things shape starting a child care business in Arizona that are different from most other states. First, the licensing distinction at five children is sharp: any operation that provides regular compensated care for five or more unrelated children requires an Arizona Department of Health Services (ADHS) Bureau of Child Care Licensing license under A.R.S. § 36-881+ – smaller operations fall outside ADHS licensing entirely (though they can still register with the Department of Economic Security for subsidy purposes). Second, annual training hours doubled in 2025: under the ADHS rule update effective August 3, 2025, child care center staff must complete 24 hours of annual training, with full compliance required by August 2026 – up from 12 hours previously. Third, the DES Empower child care subsidy system has been a waitlist for years; the FY 2026 budget added $57.7 million in new funding to begin clearing the backlog, with families being released from the waitlist in income-priority order starting at 100% Federal Poverty Level and incrementing through 165% FPL.

Arizona’s daycare market is structurally undersupplied. Phoenix metro alone has child care deserts in working-class neighborhoods on the West Valley periphery, and Maricopa County’s continuous in-migration creates persistent demand. This guide compiles the specific Arizona requirements: ADHS licensing, A.A.C. R9-5 staff-to-children ratios, AZDPS fingerprint clearance, Quality First QRIS, DES Empower subsidy contracting, ICA workers comp, AZTaxes TPT, and city zoning compliance.

Arizona Daycare Business Requirements at a Glance

Requirement	Agency / Source	Cost	Timeline
LLC Articles of Organization	Arizona Corporation Commission	$50 regular / $85 expedited	Same-day to 3 weeks
Federal EIN	IRS	Free	Immediate
ADHS Child Care Facility (Center) License	ADHS Bureau of Child Care Licensing	~$190-$1,150 by capacity	3-6 months
ADHS Child Care Group Home License	ADHS Bureau of Child Care Licensing	~$45-$95	2-4 months
AZDPS Fingerprint Clearance Card (each adult)	Arizona DPS	~$67 + fingerprinting fees	3-6 weeks
Fire Marshal Inspection	Local fire department	Varies	2-4 weeks
Sanitation/Environmental Inspection	County health department	Varies	2-4 weeks
CPR/First Aid Certification (each staff)	Approved provider	$50-$120 per person	Same-day
Annual Training (24 hours/year)	Approved providers / FTF	$0-$300/year per staff	Ongoing
Quality First Participation (voluntary QRIS)	Quality First / First Things First	Free	Multi-year quality improvement
DES Child Care Assistance Contract	DES Child Care Administration	Free	4-8 weeks
Workers’ Compensation	Private insurer or CopperPoint	NCCI 9059 – varies by payroll	Required from first employee
General Liability Insurance	Private insurer	$1,200-$3,500/yr typical	Recommended (some lenders require)
City Use Permit / Zoning Approval	City planning/zoning	$0-$500	1-3 months

How to Start a Daycare in Arizona (Step by Step)

Step 1: Choose Your License Type

Arizona has two main licensed categories under A.R.S. § 36-881 et seq.:

• Child Care Facility (Center): Any facility (commercial space, dedicated building) that provides regular compensated care for 5 or more unrelated children. Capacity varies; centers can be sized for 12, 25, 50, 100+ children depending on facility square footage and staffing. Governed by A.A.C. Title 9 Chapter 5.
• Child Care Group Home: A residential facility (the provider’s own home) where regular compensated care is provided for periods of less than 24 hours per day for 5 to 10 children through age 12. Lower licensing burden than centers. Governed by A.A.C. Title 9 Chapter 3 (or relevant article).

Family child care – under 5 children

If you care for fewer than 5 unrelated children, you fall outside ADHS licensing entirely. You can still register with the DES Child Care Administration as a “DES-certified” Family Child Care provider, which makes you eligible to accept Empower (Child Care Assistance) families. DES certification has a separate, lighter-weight application process – background checks, home safety inspection, and basic training – but no ADHS license. This is the on-ramp for many home-based providers.

Step 2: Form Your Arizona LLC and Get an EIN

File Articles of Organization with the Arizona Corporation Commission for $50. Arizona LLCs have no annual report requirement under A.R.S. § 29-3209. Get your free EIN at IRS.gov – required before the ADHS license, the DES contract, and any business bank account.

Step 3: Get AZDPS Fingerprint Clearance Cards

Every owner, director, and staff member with unsupervised access to children must hold a Level 1 Fingerprint Clearance Card from the Arizona Department of Public Safety (azdps.gov). The Level 1 process includes:

• State criminal history check via AZDPS
• FBI national fingerprint-based check
• Arizona Sex Offender Registry check
• Disqualifying offense list under A.R.S. § 41-1758.03 – includes any felony, sex offenses, child abuse, drug offenses (for some categories), and violent offenses

Cost: Approximately $67 application fee plus fingerprinting fees (~$15-$30 at most fingerprinting providers). Cards are valid for 6 years for child care positions (different than the 5-year card issued for some other professions).

Timeline: 3 to 6 weeks for clean records; longer if records require manual review. Apply early; this is often the longest single bottleneck in opening a new center.

Step 4: Apply to ADHS Bureau of Child Care Licensing

Submit your license application to ADHS Bureau of Child Care Licensing. Centers fall under A.A.C. Title 9 Chapter 5; group homes under separate articles. The application package includes:

• Completed application form and license fee
• Facility floor plans showing classrooms, restrooms, kitchen, outdoor play area, and emergency exits
• Fire marshal inspection report (from local fire department)
• Sanitation/environmental health inspection (from county health)
• Equipment inventory (cribs, cots, kitchen equipment, age-appropriate toys, playground equipment with surfacing)
• Written policies (admission, discipline, illness, emergency, transportation, food service, parent communication)
• Staff qualifications, fingerprint clearance documentation, CPR/first aid for required positions, and training plans
• Director qualifications – typically requires education + child care experience per A.A.C. R9-5
• Insurance proof (general liability typical)

Pre-licensing inspection

ADHS conducts an on-site inspection before issuing the initial license. The inspector reviews physical space, staffing plan, written policies, and emergency procedures against the entire applicable rule set. Expect to address findings; few centers pass first inspection without corrections.

License fees and capacity

Center license fees scale with licensed capacity, ranging roughly from $190 for small-capacity centers up to ~$1,150 for large facilities. Group home fees are lower (~$45-$95). Annual renewal fees apply.

Step 5: Meet Staff-to-Children Ratios (A.A.C. R9-5-404)

Arizona’s licensing ratios for child care centers are codified at A.A.C. R9-5-404:

Age Group	Staff:Children Ratio
Under 1 year (Infant)	1:5
1 year (Young Toddler)	1:6
2 years (Older Toddler)	1:8
3 years (Preschool)	1:9
4 years (Pre-K)	1:13
5 years (Kindergarten Age)	1:15
School-Age (6-12 years)	1:20

Mixed-age groups follow the ratio of the youngest child in the group. Group size limits also apply (typically 2x the ratio – so an infant group can have up to 10 children with 2 staff). When 6 or more children are enrolled in the facility, infants must not be combined for supervision with non-infants – this drives the need for a dedicated infant room.

Quality First higher-quality recommended ratios (more conservative than licensing minimums):

• Infants: 1:4, group size 8
• 1-year-olds: 1:5, group size 10
• 2-year-olds: 1:6, group size 12
• 3-year-olds: 1:9

Quality First star ratings reward facilities that operate at the recommended ratios, even though licensing only requires the minimums.

Step 6: Plan for the 24-Hour Annual Training Requirement

The August 3, 2025 ADHS rule update increased annual required training for child care center staff to 24 hours per year, up from 12 hours previously. Programs have a phase-in period through August 2026 to fully comply. The change applies to centers, not group homes (group homes have their own training schedule under their separate rule article).

Training topics typically include:

• Child development (infant/toddler/preschool/school-age age-specific)
• Child abuse and neglect prevention and reporting (mandated under A.R.S. § 13-3620)
• Health, safety, sanitation, and infection control
• Emergency preparedness
• Inclusion and disability accommodation
• Curriculum and learning environments aligned to Arizona Early Learning Standards (the state’s curriculum framework)
• CPR and first aid (must be current; minimum number of staff with certification on-site at all times)

First Things First (firstthingsfirst.org) and approved providers offer many free or low-cost training options. Plan training time into your staffing model from day one – the 24-hour requirement is significant overhead for small centers.

Step 7: Decide Whether to Participate in Quality First (QRIS)

Quality First is Arizona’s voluntary 5-star Quality Rating and Improvement System, funded primarily by First Things First (FTF) – the state agency created by 2006 ballot Proposition 203 and funded by tobacco tax revenue. Quality First was originally launched as a Phase 1 pilot with 600 programs (400 centers + 200 family child care homes) and has since expanded.

• Star ratings: 1 to 5 stars based on observation, environmental rating scales (ITERS-3 / ECERS-3 / FCCERS-3), and quality measures.
• Voluntary participation: No requirement for ADHS license; participation is opt-in.
• Benefits: Free training, coaching, instructional materials, and access to Quality First scholarships for family enrollment. Higher star ratings unlock enhanced reimbursement rates from DES Child Care Assistance.
• Costs to provider: Time investment for assessment cycles, alignment with Arizona Early Learning Standards, and adoption of recommended ratios (often more conservative than licensing minimums).

For most centers serving subsidy families, Quality First participation is effectively required for revenue optimization. For small private-pay group homes, the calculus is different.

Step 8: Register as a DES Child Care Assistance Provider (Empower)

The Arizona Department of Economic Security administers Child Care Assistance (commonly referred to historically as “Empower” in some contexts), Arizona’s federally-funded Child Care and Development Fund (CCDF) subsidy program. Eligibility:

• Income tier: Households at or below 165% of Federal Poverty Level qualify, with priority for households under 100% FPL.
• Work, education, or training requirement: Adults in the household must be working, in approved education/training, or meet other categorical eligibility (TANF, foster care, child protective services involvement).
• Arizona residency.
• Children under 13 (or up to 18 with documented special needs).

FY 2026 waitlist clearance and rate increases

The Arizona Legislature appropriated $57.7 million in additional FY 2026 funding to begin clearing the long-standing Empower waitlist. Effective August 1, 2025, DES began notifying waitlisted families – by income priority – that they could complete their eligibility process. Provider reimbursement rates were also increased to comply with federal CCDBG requirements for “equal access” to comparable child care.

To register as a contracted provider, apply through DES Child Care Administration. Once contracted, DES pays a portion of the family’s child care fee directly to your business; families pay a sliding-scale family co-payment. Quality First star ratings affect the reimbursement rate – higher-star centers receive enhanced rates.

Step 9: Register for TPT and Workers’ Compensation

TPT: Day care and child care services are generally NOT subject to Transaction Privilege Tax in Arizona – child care is treated as a service that is not in any of the 16 taxable TPT classifications. Tuition, registration fees, and care fees are not taxed. However, retail sales (school supply kits, t-shirts, fundraising merchandise) are taxable retail under TPT, and prepared food sales beyond meals provided as part of care could fall under restaurant classification. If you operate a parents’ night out program with a retail component, classify carefully.

Workers’ Compensation: NCCI class code 9059 – Day Care Center or 9077 – Day Care – Family Child Care Home applies. Required from the first regularly employed worker (A.R.S. § 23-902). Buy from any Arizona-licensed carrier or CopperPoint.

Step 10: City Zoning and Use Permit

Most Arizona cities require a use permit, conditional use permit, or zoning verification before operating a child care facility – especially in residential zones for group homes and in commercial zones for centers. Phoenix, Tucson, Mesa, Scottsdale, Tempe, Chandler, and Gilbert each have separate planning departments and processes. Verify zoning early; some neighborhoods have HOA restrictions on home-based group home operations even when city zoning permits.

Arizona Child Care Market Context: Demand Patterns

• Phoenix metro: Approximately 5 million people. Strong demand across all age bands. West Valley (Glendale, Peoria, Surprise, Avondale, Buckeye) and South Phoenix have documented child care deserts where supply is materially below demand. East Valley (Mesa, Tempe, Chandler, Gilbert) has more supply but still tight infant capacity.
• Tucson: Pima County has its own child care subsidy and Quality First infrastructure but smaller market overall. UA student-parent demand creates a distinct submarket near campus.
• Flagstaff: NAU student-parent demand, smaller market, higher per-child cost due to staffing challenges.
• Yuma: Heavy seasonal agricultural workforce drives extended-hour care demand October through April (winter lettuce season). Year-round military demand at MCAS Yuma.
• Tribal lands: The Navajo Nation, Tohono O’odham, San Carlos Apache, White Mountain Apache, and other reservations have separate tribal child care licensing systems and access to federal Tribal Child Care and Development Fund. State licensing does not apply on tribal land.
• Spring Training and Cactus League (Feb-March): Phoenix metro hotels and visitor services drive a short-term boost in evening/weekend care demand.
• Year-round demand pattern: Unlike snowbelt states, Arizona has no school-year-only seasonal pattern for kindergarten and pre-K – demand is steady year-round in Phoenix and Tucson with summer programming continuing for working families.

Cost to Start a Daycare in Arizona

Item	Group Home (10 children)	Center (50 children)
LLC formation (ACC)	$50	$50
ADHS license fee	$95	$575
AZDPS Fingerprint Clearance Cards (per adult)	$135 (2 adults)	$540 (8 staff)
Fire/sanitation inspections	$200	$500
CPR/First Aid (per staff)	$200 (2 staff)	$800 (8 staff)
Initial 24-hour training rollout	$0-$200/staff	$1,000-$2,000
Tenant improvements / room buildout	$2,000-$10,000	$30,000-$120,000
Equipment (cribs, tables, chairs, toys)	$5,000-$12,000	$25,000-$80,000
Outdoor play area + surfacing	$3,000-$10,000	$15,000-$45,000
General liability insurance	$1,200/yr	$3,000/yr
Workers’ comp (NCCI 9059/9077)	(per payroll)	$8,000-$15,000/yr
City zoning / use permit	$200-$500	$300-$2,000
Marketing and enrollment	$500-$2,000	$3,000-$8,000
Total Year 1 startup	$13,000-$50,000	$87,000-$280,000

These are minimum startup estimates. The largest variables are tenant improvements (whether you take a turnkey former-daycare space or build out from a different use), playground build-out (Phoenix sun and heat make playground surfacing and shade structures more expensive), and lease deposits (typical commercial leases require first-month + last-month + security).

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Frequently Asked Questions

How many children can I care for in Arizona without a license?

Up to 4 unrelated children. Arizona Department of Health Services Bureau of Child Care Licensing (under A.R.S. § 36-881+) requires a license for any operation providing regular compensated care to 5 or more unrelated children. If you care for fewer than 5, you fall outside ADHS licensing entirely. You can still register with the DES Child Care Administration as a “DES-certified” Family Child Care provider to accept Empower (Child Care Assistance) families – DES certification has its own background check, home safety inspection, and basic training requirements but does not require ADHS licensing. Related children (your own children, grandchildren, nieces, nephews) do not count toward the threshold.

What are the staff-to-children ratios for an Arizona child care center?

Under A.A.C. R9-5-404: 1:5 for infants under 1 year, 1:6 for 1-year-olds, 1:8 for 2-year-olds, 1:9 for 3-year-olds, 1:13 for 4-year-olds, 1:15 for 5-year-olds, and 1:20 for school-age children (6-12). Group size limits also apply. When 6 or more children are enrolled, infants must not be supervised in mixed-age groups – this drives the need for a dedicated infant room. Quality First higher-quality recommended ratios are more conservative (1:4 infants, 1:5 1-year-olds, 1:6 2-year-olds).

How much annual training is required for Arizona daycare staff?

Effective under the August 3, 2025 ADHS rule update, child care center staff must complete 24 hours of annual training per year – up from the previous 12-hour requirement. Centers have a phase-in period through August 2026 for full compliance. Training topics include child development, child abuse prevention and reporting, health and safety, emergency preparedness, inclusion, and curriculum aligned to Arizona Early Learning Standards. CPR and first aid certification must be current with at least the minimum number of staff certified on-site at all times. First Things First and approved providers offer many free or low-cost training options.

What is the AZDPS Fingerprint Clearance Card and how do I get one?

A Level 1 Fingerprint Clearance Card from the Arizona Department of Public Safety is required for every owner, director, and staff member with unsupervised access to children at an Arizona child care facility. The Level 1 process includes a state criminal history check via AZDPS, an FBI national fingerprint-based check, an Arizona Sex Offender Registry check, and disqualifying offense review under A.R.S. § 41-1758.03. Cost is approximately $67 application fee plus fingerprinting fees ($15-$30 at fingerprinting providers). Cards are valid for 6 years for child care positions. Apply early – 3 to 6 weeks for clean records, longer if records require manual review.

Are Arizona child care services taxable under TPT?

Generally no. Day care and child care services are not subject to Transaction Privilege Tax in Arizona – child care is not in any of the 16 taxable TPT classifications. Tuition, registration fees, and routine care fees are not taxed. However, retail sales (school supply kits, branded merchandise, fundraising items) are taxable retail under TPT, and prepared food sales beyond meals provided as part of care could fall under restaurant classification. If you operate ancillary retail or food service, classify carefully at AZTaxes.gov registration.

What is Quality First and do I have to participate?

Quality First is Arizona’s voluntary 5-star Quality Rating and Improvement System (QRIS), funded primarily by First Things First (FTF) – the state agency created by 2006 ballot Proposition 203 and funded by tobacco tax revenue. Star ratings (1-5) are based on observation, environmental rating scales, and quality measures. Participation is voluntary and not required for ADHS licensure. However, Quality First star ratings affect reimbursement rates from DES Child Care Assistance (Empower) – higher-star centers receive enhanced subsidy rates – so for centers serving substantial subsidy enrollment, participation is effectively required for revenue optimization.

What is the Empower waitlist and is it being cleared in 2026?

The Empower waitlist refers to Arizona’s DES Child Care Assistance subsidy waitlist – eligible families who qualify for child care subsidy but for whom funding was not available. The Arizona Legislature appropriated $57.7 million in additional FY 2026 funding to begin clearing the waitlist. Effective August 1, 2025, DES began notifying waitlisted families – by income priority order, starting at 100% Federal Poverty Level and incrementing through 165% FPL – that they could complete their eligibility process. Provider reimbursement rates were also increased to comply with federal CCDBG “equal access” requirements. For child care providers, this means more enrolled families with subsidy revenue starting in 2026.