diff --git a/core/gaspool.go b/core/gaspool.go
index 3255e34835..7c85e36fde 100644
--- a/core/gaspool.go
+++ b/core/gaspool.go
@@ -87,11 +87,21 @@ func (gp *GasPool) ReturnGasAmsterdam(txGasLimit, txRegular, txState, receiptGas
 	gp.cumulativeUsed += receiptGasUsed
 	newUsed := max(gp.cumulativeRegular, gp.cumulativeState)
 	blockGasIncrement := newUsed - oldUsed
-	returned := txGasLimit - blockGasIncrement
-	if gp.remaining > math.MaxUint64-returned {
-		return fmt.Errorf("%w: remaining: %d, returned: %d", ErrGasLimitOverflow, gp.remaining, returned)
+	if blockGasIncrement > txGasLimit {
+		// State gas via reservoir model can push the dimensional cost above
+		// the tx gas limit. Consume the excess from the pool.
+		excess := blockGasIncrement - txGasLimit
+		if gp.remaining < excess {
+			return fmt.Errorf("%w: remaining: %d, excess: %d", ErrGasLimitReached, gp.remaining, excess)
+		}
+		gp.remaining -= excess
+	} else {
+		returned := txGasLimit - blockGasIncrement
+		if gp.remaining > math.MaxUint64-returned {
+			return fmt.Errorf("%w: remaining: %d, returned: %d", ErrGasLimitOverflow, gp.remaining, returned)
+		}
+		gp.remaining += returned
 	}
-	gp.remaining += returned
 	return nil
 }
 
diff --git a/core/vm/evm.go b/core/vm/evm.go
index f1224c77e4..e8b18c3287 100644
--- a/core/vm/evm.go
+++ b/core/vm/evm.go
@@ -536,7 +536,6 @@ func (evm *EVM) create(caller common.Address, code []byte, gas GasCosts, value *
 	if err != nil {
 		return nil, common.Address{}, gas, err
 	}
-
 	// Charge the contract creation init gas in verkle mode
 	if evm.chainRules.IsEIP4762 {
 		statelessGas := evm.AccessEvents.ContractCreatePreCheckGas(address, gas.RegularGas)
@@ -620,7 +619,8 @@ func (evm *EVM) create(caller common.Address, code []byte, gas GasCosts, value *
 		// State gas charges must persist for block 2D gas accounting even
 		// though the state is reverted. Only zero regular gas as penalty.
 		isCodeValidation := evm.chainRules.IsAmsterdam &&
-			(errors.Is(err, ErrMaxCodeSizeExceeded) || errors.Is(err, ErrInvalidCode))
+			(errors.Is(err, ErrMaxCodeSizeExceeded) || errors.Is(err, ErrInvalidCode) ||
+				(err == ErrCodeStoreOutOfGas && contract.Gas.TotalStateGasCharged > savedTotalStateGas))
 		if !isRevert {
 			if isCodeValidation {
 				contract.Gas.RegularGas = 0
@@ -646,8 +646,13 @@ func (evm *EVM) initNewContract(contract *Contract, address common.Address) ([]b
 		return ret, err
 	}
 
-	// Charge code storage gas BEFORE validation checks so that state gas is
-	// properly accounted for in block gas even if the code is invalid (EIP-7954).
+	// Check code validity once upfront.
+	codeErr := CheckMaxCodeSize(&evm.chainRules, uint64(len(ret)))
+	if codeErr == nil && len(ret) >= 1 && ret[0] == 0xEF && evm.chainRules.IsLondon {
+		codeErr = ErrInvalidCode
+	}
+
+	// Charge code storage gas.
 	if !evm.chainRules.IsEIP4762 {
 		createDataGas := GasCosts{RegularGas: uint64(len(ret)) * params.CreateDataGas}
 		if evm.chainRules.IsAmsterdam {
@@ -658,6 +663,13 @@ func (evm *EVM) initNewContract(contract *Contract, address common.Address) ([]b
 			}
 		}
 		if !contract.UseGas(createDataGas, evm.Config.Tracer, tracing.GasChangeCallCodeStorage) {
+			if evm.chainRules.IsAmsterdam && codeErr == nil {
+				// Valid code that merely ran out of gas: track state gas for
+				// block accounting (EIP-8037).
+				contract.Gas.TotalStateGasCharged += createDataGas.StateGas
+				contract.Gas.RegularGas = 0
+				contract.Gas.StateGas = 0
+			}
 			return ret, ErrCodeStoreOutOfGas
 		}
 	} else {
@@ -668,14 +680,8 @@ func (evm *EVM) initNewContract(contract *Contract, address common.Address) ([]b
 		}
 	}
 
-	// Check whether the max code size has been exceeded, assign err if the case.
-	if err := CheckMaxCodeSize(&evm.chainRules, uint64(len(ret))); err != nil {
-		return ret, err
-	}
-
-	// Reject code starting with 0xEF if EIP-3541 is enabled.
-	if len(ret) >= 1 && ret[0] == 0xEF && evm.chainRules.IsLondon {
-		return ret, ErrInvalidCode
+	if codeErr != nil {
+		return ret, codeErr
 	}
 
 	if len(ret) > 0 {
diff --git a/core/vm/gas_table.go b/core/vm/gas_table.go
index 815bee9c98..8d720cce72 100644
--- a/core/vm/gas_table.go
+++ b/core/vm/gas_table.go
@@ -18,7 +18,6 @@ package vm
 
 import (
 	"errors"
-	"fmt"
 
 	"github.com/ethereum/go-ethereum/common"
 	"github.com/ethereum/go-ethereum/common/math"
@@ -596,12 +595,13 @@ func gasCreateEip8037(evm *EVM, contract *Contract, stack *Stack, mem *Memory, m
 	if overflow {
 		return GasCosts{}, ErrGasUintOverflow
 	}
-	if size > params.MaxInitCodeSize {
-		return GasCosts{}, fmt.Errorf("%w: size %d", ErrMaxInitCodeSizeExceeded, size)
-	}
-	// Since size <= params.MaxInitCodeSize, these multiplication cannot overflow
-	words := (size + 31) / 32
-	stateGas := params.AccountCreationSize * evm.Context.CostPerGasByte * words
+	// Cap word gas at MaxInitCodeSizeAmsterdam to avoid overflow.
+	// The actual init code size check happens in create() for graceful failure.
+	wordSize := min(size, params.MaxInitCodeSizeAmsterdam)
+	words := (wordSize + 31) / 32
+	// Account creation is a fixed state gas cost, not proportional to init code size.
+	// Code storage state gas is charged separately in initNewContract.
+	stateGas := params.AccountCreationSize * evm.Context.CostPerGasByte
 	// CREATE uses InitCodeWordGas (EIP-3860); Keccak256WordGas is only for CREATE2.
 	wordGas := params.InitCodeWordGas * words
 	return GasCosts{RegularGas: gas + wordGas, StateGas: stateGas}, nil
@@ -616,12 +616,13 @@ func gasCreate2Eip8037(evm *EVM, contract *Contract, stack *Stack, mem *Memory,
 	if overflow {
 		return GasCosts{}, ErrGasUintOverflow
 	}
-	if size > params.MaxInitCodeSize {
-		return GasCosts{}, fmt.Errorf("%w: size %d", ErrMaxInitCodeSizeExceeded, size)
-	}
-	// Since size <= params.MaxInitCodeSize, these multiplication cannot overflow
-	words := (size + 31) / 32
-	stateGas := params.AccountCreationSize * evm.Context.CostPerGasByte * words
+	// Cap word gas at MaxInitCodeSizeAmsterdam to avoid overflow.
+	// The actual init code size check happens in create() for graceful failure.
+	wordSize := min(size, params.MaxInitCodeSizeAmsterdam)
+	words := (wordSize + 31) / 32
+	// Account creation is a fixed state gas cost, not proportional to init code size.
+	// Code storage state gas is charged separately in initNewContract.
+	stateGas := params.AccountCreationSize * evm.Context.CostPerGasByte
 	// CREATE2 charges both InitCodeWordGas (EIP-3860) and Keccak256WordGas (for address hashing).
 	wordGas := (params.InitCodeWordGas + params.Keccak256WordGas) * words
 	return GasCosts{RegularGas: gas + wordGas, StateGas: stateGas}, nil
diff --git a/core/vm/gascosts.go b/core/vm/gascosts.go
index d996735df6..bb7a1b2b32 100644
--- a/core/vm/gascosts.go
+++ b/core/vm/gascosts.go
@@ -28,13 +28,17 @@ func (g GasCosts) Sum() uint64 {
 	return g.RegularGas + g.StateGas
 }
 
-// Sub returns true if the operation would underflow
+// Underflow returns true if the operation would underflow.
+// When state gas exceeds the reservoir, the excess spills to regular gas.
+// The check accounts for regular gas already consumed by b.RegularGas.
 func (g GasCosts) Underflow(b GasCosts) bool {
 	if b.RegularGas > g.RegularGas {
 		return true
 	}
 	if b.StateGas > g.StateGas {
-		if b.StateGas > g.RegularGas {
+		spillover := b.StateGas - g.StateGas
+		remainingRegular := g.RegularGas - b.RegularGas
+		if spillover > remainingRegular {
 			return true
 		}
 	}
diff --git a/core/vm/instructions.go b/core/vm/instructions.go
index 600f77d25f..0bc126377e 100644
--- a/core/vm/instructions.go
+++ b/core/vm/instructions.go
@@ -17,6 +17,7 @@
 package vm
 
 import (
+	"errors"
 	"math"
 
 	"github.com/ethereum/go-ethereum/common"
@@ -661,6 +662,15 @@ func opCreate(pc *uint64, evm *EVM, scope *ScopeContext) ([]byte, error) {
 		gas.RegularGas -= gas.RegularGas / 64
 	}
 
+	// EIP-7954: check init code size after gas is charged (by the gas function)
+	// but before execution. This aborts the caller's execution, ensuring all
+	// regular gas is consumed while the state gas spill is tracked.
+	if evm.chainRules.IsAmsterdam {
+		if err := CheckMaxInitCodeSize(&evm.chainRules, uint64(len(input))); err != nil {
+			return nil, err
+		}
+	}
+
 	// reuse size int for stackvalue
 	stackvalue := size
 
@@ -684,6 +694,15 @@ func opCreate(pc *uint64, evm *EVM, scope *ScopeContext) ([]byte, error) {
 	}
 	scope.Stack.push(&stackvalue)
 
+	// For inner CREATEs that fail code validation (EIP-7954 + EIP-8037):
+	// the state was reverted so no state growth occurred. Don't propagate
+	// the code storage state gas to the parent's block gas accounting.
+	// Restore the parent's state gas reservoir since it was not consumed.
+	if evm.chainRules.IsAmsterdam && (errors.Is(suberr, ErrMaxCodeSizeExceeded) || errors.Is(suberr, ErrInvalidCode)) {
+		returnGas.TotalStateGasCharged = 0
+		returnGas.RevertedStateGasSpill = 0
+		returnGas.StateGas = stateGas
+	}
 	scope.Contract.RefundGas(returnGas, evm.Config.Tracer, tracing.GasChangeCallLeftOverRefunded)
 
 	if suberr == ErrExecutionReverted {
@@ -708,6 +727,16 @@ func opCreate2(pc *uint64, evm *EVM, scope *ScopeContext) ([]byte, error) {
 
 	// Apply EIP150
 	gas.RegularGas -= gas.RegularGas / 64
+
+	// EIP-7954: check init code size after gas is charged (by the gas function)
+	// but before execution. This aborts the caller's execution, ensuring all
+	// regular gas is consumed while the state gas spill is tracked.
+	if evm.chainRules.IsAmsterdam {
+		if err := CheckMaxInitCodeSize(&evm.chainRules, uint64(len(input))); err != nil {
+			return nil, err
+		}
+	}
+
 	// Pass caller's state gas (reservoir) to child and zero it out to avoid
 	// double-counting when the unused portion is refunded on return.
 	stateGas := scope.Contract.Gas.StateGas
@@ -724,6 +753,16 @@ func opCreate2(pc *uint64, evm *EVM, scope *ScopeContext) ([]byte, error) {
 		stackvalue.SetBytes(addr.Bytes())
 	}
 	scope.Stack.push(&stackvalue)
+
+	// For inner CREATEs that fail code validation (EIP-7954 + EIP-8037):
+	// the state was reverted so no state growth occurred. Don't propagate
+	// the code storage state gas to the parent's block gas accounting.
+	// Restore the parent's state gas reservoir since it was not consumed.
+	if evm.chainRules.IsAmsterdam && (errors.Is(suberr, ErrMaxCodeSizeExceeded) || errors.Is(suberr, ErrInvalidCode)) {
+		returnGas.TotalStateGasCharged = 0
+		returnGas.RevertedStateGasSpill = 0
+		returnGas.StateGas = stateGas
+	}
 	scope.Contract.RefundGas(returnGas, evm.Config.Tracer, tracing.GasChangeCallLeftOverRefunded)
 
 	if suberr == ErrExecutionReverted {