"ESA" can mean two very different things. A state-funded Education Savings Account (sometimes called an Empowerment Scholarship Account or Education Freedom Account) holds public money from your state. A Coverdell Education Savings Account is a federal, tax-advantaged account that families fund themselves. 529 plans are a third option, also family-funded and tax-advantaged.
This article explains how they differ. It isn't tax or legal advice: rules change, and your state program, plan administrator, or a tax professional has the final word on what your account can pay for.
At a glance
| State-funded ESA | 529 plan | Coverdell ESA | |
|---|---|---|---|
| Where the money comes from | Public funds deposited by your state | Your own after-tax contributions, from anyone | Your own after-tax contributions, from anyone under the income limits |
| Who's eligible | Set by state law; varies by state | Anyone can open one for a beneficiary of any age | Contributions only before the beneficiary turns 18 |
| Yearly limits | An award amount set by the state | No yearly federal contribution limit (plans set a lifetime maximum); K–12 withdrawals up to $20,000 a year from 2026 | $2,000 a year per beneficiary, from all contributors combined |
| What it can pay for | Approved education expenses listed in the program's handbook | Qualified higher-education and listed K–12 expenses | Qualified higher-education and K–12 expenses |
| Whose rules apply | Your state's program rules | Federal tax law, plus your state's tax rules | Federal tax law |
State-funded ESAs
A state-funded ESA is a school-choice program. Instead of the money going to a public school, the state deposits it into an account the family controls and can spend on approved expenses such as curriculum, tutoring, and online courses.
- Funding: public money. Families don't contribute, and there's no tax benefit to manage.
- Eligibility: set by each state. Some programs are open to most school-age children; others are limited to certain students.
- Qualified expenses: listed in the program's handbook. Purchases usually go through a platform such as ClassWallet or Step Up For Students' EMA, either paid directly to an approved vendor or reimbursed with a receipt.
- Rules: state law and the program's handbook. Federal tax rules for 529s and Coverdells don't apply.
Brilliant works with several of these programs. See Using your state's Education Savings Account (ESA) with Brilliant for the states we support and step-by-step guides.
529 plans
A 529 plan is a tax-advantaged savings account under federal law. Anyone can contribute after-tax money, earnings grow tax-free, and withdrawals are federal-tax-free when spent on qualified expenses.[1]
- Higher education: tuition, fees, books, supplies, and other qualified college costs.
- K–12: a law signed in July 2025 expanded the K–12 expenses a 529 can cover beyond tuition, and raised the yearly K–12 limit from $10,000 to $20,000 per beneficiary starting in 2026.[1][2] The listed K–12 expenses include curriculum and curricular materials, books and other instructional materials, online educational materials, certain tutoring and educational classes, standardized test fees, dual-enrollment fees, and educational therapies for students with disabilities. Some categories carry conditions; for example, tutors must meet credential requirements and can't be related to the student.[2]
- State rules differ: states decide how K–12 withdrawals are treated for state income tax. Some states tax them or take back deductions you claimed earlier, and some haven't yet decided how to treat the newer K–12 categories.[3][4] Check your plan's disclosures before withdrawing for K–12 costs.
Coverdell ESAs
A Coverdell Education Savings Account is a smaller federal tax-advantaged account.[2]
- Contributions: up to $2,000 a year per beneficiary, from all contributors combined. The ability to contribute phases out at higher incomes.
- Age limits: contributions stop when the beneficiary turns 18, and the balance generally must be used by age 30. Both limits are waived for beneficiaries with special needs.
- Qualified expenses: higher-education costs, plus K–12 costs such as tuition, books, supplies, academic tutoring, and computer equipment, software, and internet access used by the student.
Can I use a 529 or Coverdell account for Brilliant?
We can't tell you whether a Brilliant subscription is a qualified expense for your 529 or Coverdell account. That depends on federal and state tax rules, your plan, and your family's situation. Ask your plan administrator or a tax professional before you withdraw.
If you need a receipt for your records, your Brilliant receipt email is itemized. For a copy with your student's name, email support@brilliant.org.
For the ways you can pay for Brilliant, including state ESA and scholarship funds, see Ways to pay for Brilliant.
Sources
Reviewed October 19, 2026.
[1] Internal Revenue Service, “Topic no. 313, Qualified tuition programs (QTPs)”.
[2] Internal Revenue Service, “Publication 970, Tax Benefits for Education”, chapters on Coverdell education savings accounts and qualified tuition programs.
[3] New York's 529 College Savings Program, “2026 federal tax updates”.
[4] ScholarShare 529 (California), “Frequently asked questions”.
