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, tied to OPM’s Executive Level II rate, and published in an NIH Guide Notice. Since FY2025, the applicable rate can change mid-fiscal-year, so the cap is a function of the award-issued date, not just the fiscal year label.

The FY2026 figures

For awards issued October 1, 2025 through December 31, 2025, the cap is $225,700. For awards issued January 1, 2026 through September 30, 2026, the cap is $228,000 for a full-time, 12-month appointment. NIH announced $228,000 via Guide Notice NOT-OD-26-034 (January 28, 2026), with the effective date corrected to January 1, 2026 by NOT-OD-26-038 (February 9, 2026). For faculty on a 9-month academic-year appointment, institutions typically apply a proportional academic-year equivalent of the applicable rate — approximately $171,000 using the $228,000 figure. Because the cap is revised at least annually, and mid-year as of FY2026, the specific dollar figure and its effective date should always be confirmed against NIH’s own Salary Cap Summary page rather than treated as a single fixed FY2026 number.

Scope: direct AND indirect salaries (since FY2025)

For FY1990 through FY2024, the cap applied only to direct salaries of individuals working on NIH-funded projects. Effective FY2025, per NIH Guide Notice NOT-OD-25-025, the cap also applies to indirect salaries — executive salaries charged to the uncapped cost pools that feed into an institution’s negotiated indirect (F&A) cost rate. This scope change is still in effect for FY2026 and is a distinct compliance point from the dollar figure itself: an institution reviewing only direct-charged PI/key-personnel salary against the cap is not applying the full current scope of the policy.

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 applicable capped rate is simply not an allowable charge to that award, and, since FY2025, the same ceiling applies separately to executive salary charged to indirect cost pools. Institutions handle the direct-salary 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. For the full year-by-year rate history and a worked calculation, see the CASRAI guide NIH Salary Cap 2026: Current Figure, History, and How to Calculate It.

Why this matters operationally

Because the cap can change more than once within a fiscal year (as it did for FY2026) and institutional base salaries rise independently of it, an investigator who was unaffected by the cap in one rate period can become affected the next — either because their own salary increased or because the applicable rate moved while salaries stayed flat. Sponsored-programs offices generally re-run cap calculations at each rate change 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.

Frequently Asked Questions

What is the current NIH salary cap for 2026?

It depends on the award-issued date. For awards issued October 1, 2025 through December 31, 2025, the cap is $225,700. For awards issued January 1, 2026 through September 30, 2026, the cap is $228,000, per NIH Guide Notice NOT-OD-26-034 as corrected by NOT-OD-26-038. There is no single figure covering all of FY2026.

Does the NIH salary cap only limit direct salary?

No, not since FY2025. Effective FY2025, per NIH Guide Notice NOT-OD-25-025, the cap applies to both direct salaries (individuals working directly on NIH projects) and indirect salaries (executive salaries in uncapped cost pools). For FY1990–FY2024 it applied only to direct salaries.

Does the NIH salary cap mean investigators can’t be paid more than the capped rate?

No. The cap does not limit what an institution pays an investigator — institutions remain free to set institutional base salary according to their own compensation policy. It only limits how much of that salary can be reimbursed by an NIH grant, cooperative agreement, or contract, for the percentage of effort charged to the award (or, since FY2025, for executive salary charged to indirect cost pools).

Does the salary cap apply to agencies other than NIH, such as CDC or AHRQ?

Yes. The same salary rate limitation, tied to Executive Level II of the Federal Executive Pay Schedule, applies to other HHS-funded awards as well, including those from CDC, AHRQ, and SAMHSA, not only to NIH awards.

What is the salary cap for a 9-month academic-year appointment?

For faculty on a 9-month academic-year appointment, institutions typically apply a proportional academic-year equivalent of the applicable 12-month cap — approximately $171,000 using the $228,000 FY2026 rate — rather than the full 12-month figure.

Does the NIH salary cap increase every year?

Not necessarily, and it is not always a once-a-year change. The cap is set by Congressional appropriations language tied to OPM’s Executive Level II rate, and, as FY2026 showed, the applicable figure can change mid-fiscal-year rather than only at the fiscal-year boundary. It has increased in most recent periods, but an increase is not guaranteed.