Benthic ecosystems play a significant role in the carbon (C) cycle through remineralization of organic matter reaching the seafloor. Ice algae and phytoplankton are major C sources for Arctic benthic consumers, but climate change-mediated loss of summer sea ice is predicted to change Arctic marine primary production by increasing phytoplankton and reducing ice algal contributions. To investigate the impact of changing algal C sources on benthic C processing, 2 isotope tracing experiments on 13 C-labelled ice algae and phytoplankton were conducted in the North Water Polynya (NOW; 709 m depth) and Lancaster Sound (LS; 794 m) in the Canadian Arctic, during which the fate of ice algal (C IA) and phytoplankton (C PP) C added to sediment cores was traced over 4 d. No difference in sediment community oxygen consumption (SCOC, indicative of total C turnover) between the background measurements and ice algal or phytoplankton cores was found at either site. Most of the processed algal C was respired, with significantly more C PP than C IA being released as dissolved inorganic C at both sites. Macroinfaunal uptake of algal C was minor, but bacterial assimilation accounted for 33−44% of total algal C processing, with no differences in bacterial uptake of C PP and C IA found at either site. Overall, the total processing (i.e. assimilation and respiration) of C PP was 33 and 37% higher than processing of C IA in NOW and in LS, respectively, suggesting that the future changes in quality of organic matter sinking to the seafloor could impact the C residence time at the seafloor.