The de minimis indirect cost rate is a flat, no-negotiation-required rate that a non-federal entity without its own negotiated indirect cost rate agreement can apply to federal awards, in place of proposing and negotiating a full facilities-and-administrative (F&A) rate. It exists specifically so that organizations that have never built out the cost-accounting infrastructure for a formal rate proposal — small nonprofits, new academic spin-outs, community organizations, many first-time federal subrecipients — are not shut out of indirect cost recovery entirely. This guide covers who actually qualifies, how the rate is calculated against Modified Total Direct Costs (MTDC), how an organization elects it, how long it must be used once elected, and — because the two are genuinely easy to conflate — how it differs mechanically from the separate, currently litigated dispute over NIH capping negotiated F&A rates.
What the de minimis rate is, and where it comes from
The de minimis indirect cost rate is set out in 2 CFR 200.414(f), part of the OMB Uniform Guidance that governs cost principles for federal financial assistance. It lets a non-federal entity that has never received a negotiated indirect cost rate charge indirect costs to a federal award at a flat percentage of its Modified Total Direct Costs, without going through the formal rate-proposal and negotiation process described in 2 CFR Part 200, Appendix III (for institutions of higher education) or Appendix IV (for nonprofit organizations). It sits alongside — and is a genuinely different mechanism from — a Negotiated Indirect Cost Rate Agreement (NICRA), which CASRAI covers separately, and the general concept of indirect cost recovery and the direct cost vs. indirect cost distinction.
Who qualifies
Eligibility under 2 CFR 200.414(f) turns on one condition: the organization must have never received a negotiated indirect cost rate from any federal cognizant agency. This is a narrower test than it first appears, and it is where organizations most often get the eligibility wrong:
- Qualifies: an organization that has genuinely never gone through the NICRA process — a newly formed nonprofit, a new university spin-out entity, a first-time federal grantee or subrecipient.
- Does not straightforwardly qualify: an organization that once held a negotiated rate but let the agreement lapse or expire. The regulatory language is about never having received a negotiated rate, not about currently lacking one — an entity in this position should confirm its status with its cognizant agency before assuming de minimis eligibility rather than defaulting to it.
- Subrecipients without their own negotiated rate may elect the de minimis rate on a subaward even where the prime recipient has its own separately negotiated rate — the two are independent elections. See CASRAI’s guide to subaward agreement negotiation for how this plays out in practice.
- Pass-through entities cannot force a subrecipient onto the de minimis rate. Under 2 CFR 200.332(a), a pass-through entity must honor a subrecipient’s own existing negotiated rate if it has one, and may not require use of the de minimis rate instead as a condition of the subaward.
The current rate: two different numbers depending on the agency and the award
This is the part of the de minimis rate that has genuinely changed more than once in the past two years, and it is easy to cite the wrong figure if you don’t check which one applies to a specific award:
- Government-wide default: up to 15% of MTDC. OMB’s April 2024 revision to the Uniform Guidance raised the de minimis rate from 10% to up to 15% of MTDC, effective for federal awards issued on or after October 1, 2024. Absent an agency-specific override, this 15% figure is the current government-wide ceiling under 2 CFR 200.414(f).
- NIH specifically: reverted to 10% of MTDC as of April 20, 2026. NIH had initially adopted the updated 15% figure via Notice NOT-OD-25-059 (January 13, 2025) for awards with budget periods beginning on or after October 1, 2024. NIH then reversed that adoption via Notice NOT-OD-26-072 (April 20, 2026), reinstating the longstanding 10% de minimis rate for NIH awards. NIH’s own notice ties this reversal to a statutory appropriations provision (Consolidated Appropriations Act, 2026) requiring NIH’s indirect-cost provisions to continue operating as they did under 45 CFR Part 75 in FY2017 — a statutory constraint, not a discretionary NIH policy choice. See CASRAI’s dedicated coverage of NIH’s April 2026 notice reversing indirect-cost flexibilities for the full mechanics, including the related reversion of the MTDC subaward threshold from $50,000 back to $25,000.
- Practical implication: a research administrator preparing a budget should not assume 15% (or 10%) applies uniformly. Check the specific federal awarding agency’s current guide notices and the award’s issuance date — other federal agencies besides NIH may still be operating under the 2024-revised 15% figure without an equivalent statutory override.
See CASRAI’s de minimis rate (NIH) dictionary entry for the short-form definition, and the NIH Indirect Cost Policy guide for how this provision fits alongside NIH’s other mechanism-specific indirect cost exceptions (training grants, individual fellowships, foreign components).
How it’s calculated: the MTDC base
The de minimis rate is applied to Modified Total Direct Costs (MTDC), not to an award’s full direct-cost total. MTDC is defined in 2 CFR 200.1 and specifically excludes several cost categories from the base before the percentage is applied:
- Equipment (defined as tangible property with a per-unit acquisition cost meeting the capitalization threshold, typically $5,000 or more)
- Capital expenditures
- Charges for patient care
- Rental costs of off-site facilities
- Tuition remission
- Scholarships and fellowships
- Participant support costs
- The portion of each subaward beyond the MTDC subaward threshold — the regulatory text sets this at the first $50,000 of each subaward following the 2024 Uniform Guidance revision, though many institutions’ current NICRAs (and, per NIH’s April 2026 reversal above, NIH awards specifically) still apply the longstanding $25,000 threshold; confirm which figure applies to a given award before calculating.
Everything else in the direct cost budget — salaries and wages, fringe benefits, materials and supplies, travel, and the included portion of subawards — makes up the MTDC base that the de minimis percentage is applied to. See CASRAI’s MTDC (Modified Total Direct Cost) entry for the full definition.
Illustrative example
The organization, dollar figures, and award described below are an illustrative composite constructed to show the calculation mechanics — not a real institution or real award.
A newly incorporated nonprofit research organization, with no negotiated indirect cost rate, receives a federal award with a direct cost budget of $220,000, made up as follows: $150,000 in salaries and fringe benefits, $20,000 in supplies, $10,000 in travel, $15,000 in equipment, and a $25,000 subaward to a partner organization.
- Equipment ($15,000) is excluded from MTDC entirely.
- The subaward ($25,000) is included in full, since it falls under the $25,000 threshold (no excess portion to exclude in this example).
- MTDC = $150,000 + $20,000 + $10,000 + $25,000 = $205,000.
- At a 10% de minimis rate: $205,000 × 0.10 = $20,500 in recoverable indirect costs.
- At a 15% de minimis rate (if the awarding agency and award date qualify for the higher figure): $205,000 × 0.15 = $30,750.
Electing the rate, and how long it lasts
Unlike a NICRA, there is no separate rate-proposal package to submit or negotiate for the de minimis rate — an eligible organization simply applies it in the award’s proposed budget and budget justification, documenting the MTDC calculation. Two conditions apply once it’s in use:
- Consistency across federal awards: once an organization elects to use the de minimis rate, it must apply that rate consistently to all of its federal awards, not selectively per award.
- Indefinite duration, with the option to move to a negotiated rate later: the de minimis rate may be used indefinitely — there is no mandatory expiration or renewal cycle the way a NICRA requires periodic renegotiation. An organization may choose at any time to instead build out a full indirect cost rate proposal and negotiate its own NICRA with its cognizant agency, at which point it would move off the de minimis rate for future awards.
De minimis rate vs. a negotiated rate (NICRA)
| Dimension | De minimis rate | Negotiated rate (NICRA) |
|---|---|---|
| Who can use it | Entities that have never received a negotiated rate | Any entity willing to complete the proposal and negotiation process |
| Rate-setting process | No proposal or negotiation — flat statutory/regulatory percentage | Formal rate proposal (2 CFR 200 Appendix III/IV) negotiated with a cognizant federal agency |
| Documentation burden | Minimal — apply the flat rate to MTDC | Substantial — cost accounting records, DS-2 disclosure statement for larger institutions, periodic renegotiation |
| Typical rate level | 10% or 15% of MTDC depending on agency/award date | Often well above 15%, especially at research-intensive universities, since it reflects the institution’s actual facilities and administrative cost structure |
| Duration | Indefinite until the entity elects otherwise | Fixed period per agreement, subject to renegotiation |
How this differs from the NIH negotiated-rate cap dispute
It is easy to conflate the de minimis rate with a separate, much more heavily covered NIH policy dispute, but the two are mechanically distinct. In February 2025, NIH proposed capping every institution’s individually negotiated F&A rate at a flat 15% — a policy aimed at institutions that already hold their own NICRA, currently negotiated well above 15% in many cases at research-intensive universities. That proposal has been the subject of ongoing litigation and is a different mechanism entirely from the de minimis rate covered on this page, which has always applied only to organizations with no negotiated rate at all. CASRAI’s NIH’s 15% Indirect Cost Cap guide covers that dispute and its current status in full; the two should not be cited interchangeably, since confusing them can lead an institution with an existing negotiated rate to wrongly assume the de minimis provisions on this page apply to its situation, or vice versa.
Frequently asked questions
Does the de minimis rate apply to every federal agency?
The underlying provision, 2 CFR 200.414(f), is government-wide. In practice, agencies can and do apply agency-specific variations — NIH’s reversion to 10% via Notice NOT-OD-26-072 while the government-wide default sits at 15% is a current example. Always check the specific awarding agency’s guidance rather than assuming the government-wide figure applies uniformly.
Can an organization use a different indirect cost treatment on different federal awards?
No. Once an organization elects the de minimis rate, it must use that rate consistently across all of its federal awards, not selectively.
Does electing the de minimis rate require approval from the funding agency?
No formal proposal or negotiation is required in the way it is for a NICRA — the organization applies the rate directly in its budget. This is one of the rate’s main practical advantages for organizations without cost-accounting infrastructure in place.
Can a subrecipient use the de minimis rate even if the prime recipient has a negotiated rate?
Yes. Each organization’s eligibility for the de minimis rate is assessed independently; a subrecipient without its own negotiated rate may elect the de minimis rate on a subaward regardless of the prime recipient’s own rate status, and a pass-through entity cannot require the subrecipient to use the de minimis rate instead of an existing negotiated rate it already holds (2 CFR 200.332(a)).
What happens if an organization later negotiates its own rate?
It moves off the de minimis rate for future awards and applies its newly negotiated rate going forward. Awards already budgeted under the de minimis rate are generally not retroactively recalculated.
