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Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →There is no single indirect-cost percentage that every university can charge on every federal research grant. Most institutions use a federally negotiated rate applied to a defined cost base. Eligible organizations without a current negotiated rate may generally elect a de minimis rate of up to 15% of modified total direct costs (MTDC), but that is not a universal cap on university rates. The agency, award terms, rate base, and applicable dates determine what can be charged.
What indirect costs pay for
Indirect costs—also called facilities and administrative (F&A) costs—are shared expenses that are not readily identifiable with one project but support an organization’s general operations. The National Science Foundation (NSF) lists accounting, personnel, purchasing, rent, depreciation, and utilities as examples. Institutions allocate these costs to federal awards through a rate applied consistently. NSF’s Indirect Cost Rate Policies describes the general framework.
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These charges are distinct from direct costs, such as project-specific salaries or supplies. A university does not simply apply its indirect-cost percentage to every dollar in an award: the percentage is applied to the rate’s specified cost base.
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Most organizations that recover indirect costs from federal awards negotiate a rate with the federal agency that provides the preponderance of their funding. NSF says the cognizant agency for colleges and universities is usually the Department of Health and Human Services (HHS) or the Office of Naval Research (ONR). The resulting negotiated indirect cost rate agreement (NICRA) identifies the applicable rate and base.
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A rate can change during an award period if a new rate is negotiated. Whether and how that change affects a particular award depends on its terms, so the rate alone does not settle the charge. When evaluating a budget, check the agreement, the award, and the agency’s requirements.
Why the rate base matters
MTDC is not the same as the full award total. It is a defined base under the applicable federal cost principles, with specified exclusions. A rate of 15% applied to MTDC therefore does not mean that 15% of the entire award is charged as indirect cost. Other negotiated rates may also use a base different from the award total.
For a useful comparison, write down both parts of the calculation: the rate and the base to which it applies. Two percentages cannot be compared meaningfully unless their bases and relevant award rules are also clear.
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When the 15% de minimis rate applies
Under the general Uniform Guidance framework described by NSF, an eligible recipient or subrecipient without a current federally negotiated indirect cost rate—including a provisional rate—may elect a de minimis rate of up to 15% of MTDC. It is an option for qualifying organizations, not a blanket limit on what a university with a negotiated rate may charge.
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NSF says recipients may elect the updated 15% rate for new awards executed on or after October 1, 2024, unless the solicitation says otherwise. For existing awards, the rate may be applied to costs incurred after October 1, 2024 if sufficient funds remain to meet project objectives; it cannot be applied retroactively to costs incurred before that date. Check the solicitation and award terms before relying on the election. NSF’s policy page provides its guidance.
NIH awards require an award-specific check
NIH’s policy history makes it especially important not to treat a headline percentage as a universal answer. In February 2025, NIH issued NOT-OD-25-068, announcing a standard 15% indirect-cost rate for new and existing institutional awards with go-forward application from February 10, 2025. NIH’s implementation notice separately says NIH continues to honor NICRAs negotiated before October 1, 2024 and recognizes the revised 15% de minimis rate for eligible non-SBIR/STTR awards. The NIH notice and its implementation notice describe those positions.
NIH’s FY 2026 Grants Policy Statement, revised in March 2026, provides current reimbursement guidance and special rates for certain award classes. For specified institutional training and career awards, it describes an 8% MTDC rate. The applicable category and award terms matter; do not assume that this special rate applies to other NIH grants. Consult the NIH Grants Policy Statement and policy materials, the award notice, and the institution’s sponsored-research office.
The official NIH materials cited here do not by themselves establish the definitive current court disposition or every agency’s later treatment of the 2025 announcement. Whether that policy controls a particular award should be checked against current authoritative guidance and the award’s terms rather than inferred from the announcement alone.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to find the charge for a specific grant
- Find the institution’s current rate agreement. Confirm whether it has a current negotiated rate, and note the rate, base, and effective dates.
- Identify the awarding agency and its requirements. The cognizant agency that negotiates the institutional rate may differ from the agency awarding a particular grant; review the awarding agency’s policy as well.
- Read the solicitation and award notice. Look for a specified rate, exception, or award-class rule that overrides or qualifies the general approach.
- Check the award’s timing and costs. Establish whether the award is new or existing and when the costs are incurred; transition dates can affect whether an updated rate or election applies.
- Confirm the calculation base. Determine whether the rate applies to MTDC or another base, and do not multiply the rate by the full award unless the award’s rules say to do so.
- Ask the sponsored-research office to verify current policy. This is particularly important for NIH awards affected by the 2025 announcement, later guidance, or legal developments.
What NIH’s published figures do—and do not—show
In its 2025 notice, NIH reported that its FY 2023 funding supported more than 35 billion dollars in research grants: about 26 billion dollars in direct research costs and 9 billion dollars in indirect costs. NIH said this supported almost 50,000 competitive grants to more than 300,000 researchers at more than 2,500 institutions. These are NIH’s reported aggregate figures, not a standard rate for an individual university or award. NIH’s notice gives the figures and context.
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