Coverdell ESA Income Limits: MAGI Phase-Out Ranges and Math

To contribute the full $2,000 to a Coverdell Education Savings Account, a single filer’s modified adjusted gross income must be under $95,000, and a married couple filing jointly must be under $190,000 combined. Above those points, the Coverdell ESA income limits phase your contribution down, reaching zero at $110,000 for single filers and $220,000 for joint filers. These thresholds are written into the tax code and are not indexed for inflation, so the 2026 numbers are the same ones that have applied since the account was created.¹

The $2,000 cap is a per-beneficiary limit, not a per-contributor one. It applies across every Coverdell account that exists for a given child and across everyone who might contribute.²

Phase-Out Ranges by Filing Status

Single, head of household, or qualifying surviving spouse. Full $2,000 below $95,000 MAGI. Phase-out between $95,000 and $110,000. Nothing at $110,000 or above.¹
Married filing jointly. Full $2,000 below $190,000 combined MAGI. Phase-out between $190,000 and $220,000. Nothing at $220,000 or above.¹
Married filing separately. The statute applies the $95,000 starting threshold to any return that is not a joint return, which gives MFS filers the same $95,000–$110,000 phase-out as single filers.

Congress fixed these dollar figures in the statute itself, and unlike IRA limits or the standard deduction, they don’t move with inflation.

How the Phase-Out Math Works

Inside the phase-out range, your maximum contribution shrinks proportionally. Take the amount your MAGI exceeds the lower threshold, divide by the width of the range, and reduce the $2,000 cap by that fraction.¹

The single-filer range is $15,000 wide. The joint range is $30,000 wide.

Single Filer at $101,000 MAGI

MAGI exceeds $95,000 by $6,000. Divide $6,000 by $15,000 and you get a 40% reduction. That’s an $800 cut, leaving a maximum contribution of $1,200.

Joint Filers at $205,000 MAGI

Combined MAGI exceeds $190,000 by $15,000. Divide $15,000 by $30,000 for a 50% reduction. Cut the $2,000 cap in half, and the maximum contribution for the year is $1,000.

At the top of each range, the fraction hits 100% and the contribution goes to zero. A single filer at exactly $110,000 has $15,000 divided by $15,000, and no contribution is allowed.

Which MAGI You Use

MAGI for the Coverdell is not the same MAGI you’d calculate for a Roth IRA or for premium tax credits. Every tax provision defines its own version. For the Coverdell, start with your AGI on Form 1040 line 11 and add back:³

Income excluded under the foreign earned income exclusion (Form 2555, line 45).
The foreign housing deduction on Form 2555, line 50.
Income excluded because you were a resident of American Samoa (Form 4563) or Puerto Rico.
The student loan interest deduction on Schedule 1, line 21.
Employer-provided adoption benefits excluded from income (Form 8839, line 28 minus any positive amount on line 29).

If none of those apply, MAGI equals AGI. For most domestic filers without foreign income or adoption benefits, the calculation ends there.

Who the Income Limits Actually Apply To

The MAGI thresholds bind individual contributors. Corporations, trusts, and other entities can contribute to a Coverdell ESA no matter how much income they have.² That’s the practical workaround for high-income families: a family business organized as a corporation, or an irrevocable trust, can put in the $2,000 even when the parents’ MAGI is over the cap.

The beneficiary can also contribute to their own account. Any individual contributor, the beneficiary included, has to clear the same MAGI test. And every dollar from every source counts toward the single $2,000 annual cap for that child, so contributors need to coordinate.

One boundary worth naming: the income limits restrict who can contribute. They don’t restrict who can open or maintain the account. A parent over the income cap can still serve as the responsible individual. Someone else, whether a grandparent, an entity, or the child, makes the contribution.

What Happens If You Contribute Anyway

Contributing more than you’re allowed, whether because you were over the income cap or because multiple contributors pushed the total above $2,000, triggers a 6% excise tax on the excess. The IRS assesses it every year the excess stays in the account.⁴ The tax can’t exceed 6% of the total account value at year-end, but on a small overage the full 6% of the excess normally applies.

To stop the penalty from recurring, pull out the excess contribution and any earnings it generated before the due date of your federal return for that year, including extensions.² Miss that deadline and you’ll report and pay the 6% tax on Form 5329. The penalty keeps applying each year until you either remove the excess or absorb it by contributing less than the maximum in a later year.

The coordination problem is real. If grandparents put in $1,500 and a parent puts in $1,000, the beneficiary has received $2,500, and $500 of that is an excess contribution. The IRS doesn’t track who contributed what. It tracks that total contributions to all of a beneficiary’s Coverdell accounts exceeded $2,000.²

1
Office of the Law Revision Counsel. 26 U.S. Code 530 – Coverdell Education Savings Accounts
2
Internal Revenue Service. Topic No. 310, Coverdell Education Savings Accounts
3
Internal Revenue Service. Modified Adjusted Gross Income
4
Office of the Law Revision Counsel. 26 U.S. Code 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities