NIH Salary Cap

The NIH salary cap — formally the salary rate limitation tied to Executive Level II of the Federal Executive Pay Schedule — is the maximum annual institutional base salary rate that NIH grants, cooperative agreements, and contracts may reimburse. The same limitation applies to other HHS-funded awards, including those from CDC, AHRQ, and SAMHSA. It is set annually by Congressional appropriations language and published each year in an NIH Guide Notice.

The FY2026 figure

Effective January 1, 2026, NIH raised the salary cap to $228,000 for a full-time, 12-month appointment, up from the prior $225,700 rate. This was announced via NIH Guide Notice NOT-OD-26-034, with related implementation and rebudgeting guidance issued in NOT-OD-26-038. For faculty on a 9-month academic-year appointment, institutions typically apply a proportional academic-year equivalent, approximately $171,000, rather than the full 12-month figure. Because the cap is revised annually and tied to federal pay-scale adjustments, the specific dollar figure should always be confirmed against the current-year NIH Guide Notice rather than treated as fixed — the cap has increased in most recent fiscal years but is not guaranteed to do so.

What the cap limits — and what it doesn’t

The cap does not restrict what an institution pays an investigator; institutions remain free to set institutional base salary (IBS) at whatever level their own compensation policy dictates. What the cap restricts is federal grant reimbursement: for any percentage of effort charged to an NIH-funded award, the portion of salary above the capped rate is simply not an allowable charge to that award. Institutions handle the gap in one of two ways — cost-sharing the excess from non-federal, institutional funds, or reducing the percentage of effort formally charged to the award (while still requiring the actual effort committed to be performed and, in most institutional policies, still requiring the salary above the cap to be accounted for through other means rather than simply going uncompensated).

Interaction with effort reporting and cost-sharing

The salary cap and effort reporting are administratively inseparable: effort reporting certifies the percentage of an individual’s professional time devoted to a sponsored project, and that percentage is the basis for calculating how much salary is properly chargeable. See Time and Effort Reporting for how that certification process works. When IBS exceeds the cap, the effort percentage recorded on the certification must still reflect actual effort performed — institutions cannot understate the effort percentage merely to make the capped dollar amount appear to fully cover the committed time, since that would misstate what was actually certified. Instead, the excess salary is typically recorded as institutional cost-sharing, which itself has downstream implications for base calculations on future awards and for audit exposure if not documented consistently across every grant an investigator holds. For a detailed treatment of how effort commitments are allocated and reconciled when an investigator holds multiple awards, several of which may separately be affected by the cap, see the guide on Faculty Effort Allocation Across Multiple Grants.

Why this matters operationally

Because the cap changes annually and institutional base salaries rise independently of it, an investigator who was unaffected by the cap in one fiscal year can become affected the next — either because their own salary increased or because appropriations held the cap flat while salaries rose. Sponsored-programs offices generally re-run cap calculations at the start of each fiscal year and at any salary change, rebudgeting affected awards where allowed, since retroactively discovering an over-the-cap charge on an already-drawn-down award is a compliance finding, not a routine adjustment.