Equipment (2 CFR 200.1 Definition)

Under the federal Uniform Guidance (2 CFR Part 200), “Equipment” is a defined term with a specific two-part test, not a plain-English description of lab hardware. It matters because whether an item is classified as Equipment or as a Supply determines how it is budgeted, procured, tracked, tagged, inventoried, and disposed of on a federal award — including NIH grants, which use this same government-wide definition rather than an NIH-specific one.

Operational definition

Per 2 CFR 200.1 (the Uniform Guidance definitions section), “Equipment” means tangible personal property (including information technology systems) that meets both of the following conditions:

• Useful life of more than one year; and
• A per-unit acquisition cost that equals or exceeds the lesser of the capitalization level established by the non-federal entity (the recipient institution) for financial statement purposes, or $10,000.

Both conditions must be met. An item that will last five years but costs $300 is not Equipment. An item that costs $50,000 but is consumed or has a useful life under a year is not Equipment either (and is unlikely to exist in practice, but the test is conjunctive, not either/or).

The $10,000 federal floor — and why some sources still say $5,000

OMB’s Uniform Guidance previously set the floor at $5,000. A 2024 revision to 2 CFR 200 raised the government-wide default capitalization floor for Equipment from $5,000 to $10,000, applicable to federal awards issued on or after October 1, 2024. NIH implemented the same change for its own awards. Older institutional policy pages, training materials, and even some still-uncorrected secondary sources continue to cite the $5,000 figure, so when you see it, check the date of the source and the issuance date of the specific award in question — pre-October 2024 awards may still be governed by policy language that references the earlier threshold, depending on the institution’s own capitalization policy and how it was written.

Institutions may set a lower — never higher — threshold

The $10,000 figure is a ceiling on the floor, not a fixed number every institution must use. 2 CFR 200.1 defines the threshold as “the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $10,000.” In practice this means:

• An institution with its own $5,000 capitalization policy (common among universities that haven’t revised policy since the pre-2024 rule, or that simply prefer a lower internal bar for asset control) must apply its own $5,000 threshold to federal awards — not the higher $10,000 federal default.
• An institution cannot set its capitalization threshold above $10,000 and still have items below $10,000 escape Equipment treatment on a federal award; the federal $10,000 figure operates as a ceiling for this purpose.
• Sponsored-programs offices should confirm their own institution’s current capitalization policy before assuming the federal default applies — it frequently does not.

Equipment vs. Supplies

2 CFR 200.1 also defines “Supplies” as all tangible personal property other than Equipment — including computing devices below the Equipment cost threshold regardless of useful life. The Equipment/Supplies line is the operative distinction for a research administrator because it drives different treatment across several downstream processes:

• Budgeting and proposal preparation: Equipment is typically its own line item and, unlike most direct costs, is generally excluded from the Modified Total Direct Cost (MTDC) base used to calculate indirect costs (F&A) — see also equipment cost (grant) for how this plays out in budget preparation across US and non-US sponsors. Supplies are not excluded from MTDC.
• Procurement: Equipment purchases often trigger additional requirements (e.g., sole-source justification thresholds, competition documentation) under 2 CFR 200’s procurement standards that a routine supply purchase does not.
• Property management and tagging: Equipment must be entered into the institution’s property/asset management system, physically tagged, and periodically inventoried per 2 CFR 200.313 (part of Subpart D, Post-Federal Award Requirements); supplies are expensed and tracked, if at all, through ordinary purchasing records rather than an asset register.
• Disposition at project end: Equipment disposition follows specific federal rules (2 CFR 200.313) governing sale, transfer, or retention and — above certain fair-market-value thresholds — may require federal agency disposition instructions or return of the government’s proportional interest. Supplies have no equivalent disposition requirement.

Worked examples

• A university purchases a benchtop centrifuge for $12,400 with an expected service life of eight years, charged to an NIH R01. It meets both prongs of the 2 CFR 200.1 test ($12,400 exceeds $10,000; eight years exceeds one year) and is classified as Equipment — tagged, entered in the property system, and generally excluded from the MTDC base.
• The same lab buys a $180 digital thermometer with a two-year expected life. It clears the useful-life prong but fails the cost prong ($180 is far below the $10,000/institutional threshold), so it is a Supply — expensed normally, no tagging or asset-register entry required.

Counter-example

A $25,000 reagent order used up entirely within a single experiment is not Equipment, regardless of its total dollar value, because reagents are consumed rather than possessing a useful life beyond one year — the cost prong alone does not make something Equipment if the useful-life prong fails.

Why “NIH equipment definition” isn’t really its own separate definition

NIH does not maintain an agency-specific definition of “Equipment” that differs from 2 CFR 200.1 — as an HHS operating division, NIH applies the government-wide Uniform Guidance definition to its own grants, and the NIH Grants Policy Statement incorporates 2 CFR Part 200 by reference for cost-classification purposes rather than restating a competing threshold. A search for an “NIH-specific” equipment definition leads back to the same 2 CFR 200.1 text described on this page; any apparent difference typically reflects an outdated secondary source (most often the superseded $5,000 figure) rather than an actual NIH-only rule. See also 2 CFR 200 Subpart E (Cost Principles) for how equipment costs interact with allowability and allocability.