A system and method for enabling fallback states for energy efficient Ethernet (EEE). EEE devices can be designed to support multiple power saving states that impact layers higher than the PHY layer. Typically, these higher levels of power savings would require a greater period of time to accommodate a return to an active state. In a dynamic negotiation process, the receiving device can advertise multiple fallback power saving states to the transmitting device. The transmitting device's allocation of buffering can then determine which of the power saving states would be supported.