Coverdell ESA Tax Calculator 2026 β Education Savings Account
Calculate Coverdell ESA contribution limits after MAGI phase-out, excess contribution penalties, tax-free growth, and compare Coverdell vs 529 plan side by side.
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Allowed Contribution (After Phase-Out)
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Excess Contribution (6% Penalty)
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Excise Tax on Excess
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Projected Balance at Age 18
Coverdell ESA Calculation Summary
How the Coverdell ESA Phase-Out Works
The $2,000 annual contribution limit is reduced proportionally for contributors with MAGI in the phase-out range. For single filers: $95,000β$110,000. For married filing jointly: $190,000β$220,000. Above the top threshold, no contribution is allowed.
Phase-Out Formula
Single Phase-Out: $95,000 to $110,000 (range: $15,000)
MFJ Phase-Out: $190,000 to $220,000 (range: $30,000)
Reduction = ($2,000) x [(MAGI - Phase-Out Start) / Phase-Out Range]
Allowed = max(0, $2,000 - Reduction)
Excess Penalty = 6% x excess contribution amount
MFJ Phase-Out: $190,000 to $220,000 (range: $30,000)
Reduction = ($2,000) x [(MAGI - Phase-Out Start) / Phase-Out Range]
Allowed = max(0, $2,000 - Reduction)
Excess Penalty = 6% x excess contribution amount
Example
MFJ couple with MAGI $205,000, contributing $2,000:
Phase-out: ($205,000 - $190,000) / $30,000 = 50% reduction
Allowed: $2,000 x (1 - 0.50) = $1,000
Excess: $2,000 - $1,000 = $1,000
6% excise tax on excess: $60
Phase-out: ($205,000 - $190,000) / $30,000 = 50% reduction
Allowed: $2,000 x (1 - 0.50) = $1,000
Excess: $2,000 - $1,000 = $1,000
6% excise tax on excess: $60
Sources and References (click to expand)
Extended
Coverdell vs 529 Comparison Calculator
Side-by-side: contribution limits, K-12 use, 18-year growth projection, and SVG chart
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Coverdell ESA vs 529 Plan β Side-by-Side
| Feature | Coverdell ESA | 529 Plan |
|---|---|---|
| Annual Contribution Limit | $2,000 per beneficiary | Up to gift tax annual exclusion (~$19,000) |
| K-12 Tuition Coverage | Broad: tuition, books, uniforms, transport | $10,000/yr tuition only (TCJA) |
| College Coverage | Full qualified expenses | Full qualified expenses |
| MAGI Income Limit | Yes β phases out $95K-$110K (single) | None for contributors |
| Beneficiary Age Limit | Must contribute before age 18; use by 30 | No age limit |
| Investment Options | Brokerage account (stocks, ETFs) | Plan-specific menu (mutual funds) |
| State Tax Deduction | No | Many states offer deduction |
| Rollovers | To family member Coverdell or 529 | To family member 529 or Roth IRA (SECURE 2.0) |
18-Year Growth Projection
| Age | Year | Coverdell Balance | 529 Balance |
|---|
Balance Growth Over 18 Years at 7% Return
Frequently Asked Questions
What is the Coverdell ESA annual contribution limit?
The Coverdell ESA annual contribution limit is $2,000 per beneficiary, regardless of how many accounts are open or how many contributors there are. If a grandparent, parent, and aunt all contribute to the same child's Coverdell, the combined total from all sources cannot exceed $2,000 in any given year. Excess contributions are subject to a 6% excise tax. The limit has not been indexed for inflation and has been $2,000 since 2002.
Who can contribute to a Coverdell ESA? Are there income limits?
Any individual with MAGI below $110,000 (single) or $220,000 (married filing jointly) can contribute. The $2,000 limit phases out between $95,000β$110,000 (single) and $190,000β$220,000 (MFJ). Above these thresholds, no contribution is allowed. Corporations and tax-exempt organizations can contribute regardless of income. The beneficiary must be under age 18 when the contribution is made (no age limit for special needs beneficiaries).
What qualified education expenses can a Coverdell ESA cover?
Coverdell ESAs cover a broader range than 529 plans. For K-12: tuition, fees, books, supplies, tutoring, uniforms required by school, transportation, special needs services, and room and board (if student enrolled at least half-time). For post-secondary: tuition, fees, books, room and board, special needs expenses, and certain computer/technology expenses. The key advantage over 529 plans is that K-12 expenses at public, private, or religious schools qualify without the $10,000 annual 529 cap.
What happens to a Coverdell ESA when the beneficiary turns 30?
The account must be distributed or rolled over to an eligible family member's Coverdell within 30 days after the beneficiary's 30th birthday (or 30 days after death if earlier). Any remaining balance that is not a qualified expense is distributed and subject to ordinary income tax PLUS a 10% additional tax on the earnings portion. To avoid this, roll over the account to a sibling, spouse, or other qualifying family member under age 30.
How does a Coverdell ESA compare to a 529 plan?
Coverdell pros: covers K-12 expenses more broadly, can invest in individual stocks and other assets. Coverdell cons: $2,000/year limit (vs. $19,000+ for 529), MAGI phase-out applies to contributors, must distribute by age 30 (vs. no age limit for 529). 529 pros: much higher contribution limits, no income restriction for contributors, estate planning benefits with superfunding, many state tax deductions. Both grow tax-free and distribute tax-free for qualified expenses. For most families, 529 plans offer more flexibility and higher limits.