“NIH funding cuts” describes several distinct, overlapping developments from 2025 into 2026, not one event — and by mid-2026 the outcomes have diverged sharply from the administration’s original proposals. This piece separates what was proposed, what was enacted, and what remains in litigation, since research offices tracking award risk need to know which is which.
The appropriations fight: proposed 40% cut, actual 1% increase
The Trump administration’s FY2026 budget request sought roughly a 40% reduction to NIH’s budget and proposed consolidating the agency’s 27 institutes and centers into eight. Congress rejected both. On February 3, 2026, Congress passed and the President signed a spending bill funding NIH at $48.7 billion for FY2026 — a $415 million, roughly 0.9% increase over FY2025 — leaving the 27-institute structure intact. Appropriators from both chambers described the outcome as a near-total rebuke of the administration’s proposed downsizing (STAT News).
The same law also included statutory language barring the administration from imposing the 15% flat indirect-cost (F&A) rate cap NIH had attempted via Notice NOT-OD-25-068 in February 2025 — a policy that had already been tied up in litigation and was not in effect for most institutions by the time Congress acted. For research offices, that means the headline appropriations number is flat-to-slightly-up, and the F&A-rate threat that dominated 2025 coverage is, for now, closed off at the legislative level rather than resolved purely in court.
One trade-off did survive in the final bill: Congress allowed NIH to continue a revised approach to multi-year awards that, per reporting on the deal, has meant several thousand fewer new awards to individual investigators than under the prior funding structure — a reduction in award count that a flat topline budget number doesn’t show.
Grant terminations and the ongoing APHA v. NIH litigation
Separately from the budget fight, NIH terminated hundreds of active grants in 2025 under agency guidance restricting funding tied to DEI, gender-identity, and related topics, issued after February 2025 executive orders. American Public Health Association, et al. v. NIH (D. Mass., filed April 2, 2025) challenged both the terminations and the underlying guidance.
- June 16, 2025: The district court ruled that roughly 900 grant terminations were unlawful — arbitrary and capricious under the APA — vacated the guidance documents, and ordered the terminated awards reinstated.
- August 21, 2025: The Supreme Court, in a 5–4 decision on NIH’s emergency application (No. 25A103), stayed the part of the district court’s order that had directly reinstated the individual grant terminations — holding that challenges to specific termination decisions likely belong in the Court of Federal Claims under the Tucker Act, not in district court. The Court left the separate vacatur of NIH’s underlying guidance documents in place, finding the government hadn’t shown irreparable harm from that part of the order. The net effect: NIH could resume terminating grants under the challenged criteria — reporting at the time put the value of affected awards at roughly $800 million — even though the guidance those terminations relied on remained vacated.
- January 6, 2026: The First Circuit Court of Appeals heard oral argument on the preliminary injunction underlying the case. As of this writing, that appeal is the live procedural front in the litigation.
The practical split for grants staff: a terminated award’s underlying policy basis and its individual reinstatement are now proceeding on two different legal tracks with different courts and different timelines — a distinction worth understanding before advising a PI on what a favorable district-court ruling elsewhere in this litigation actually means for their specific award. For the mechanics of how NIH terminates an award, the grounds it can cite, and how an institution appeals, see NIH Grant Terminations: Grounds, Process, and Appeal Rights.
A quieter indirect-cost action: NOT-OD-26-072
Independent of both the appropriations outcome and the termination litigation, NIH issued Notice NOT-OD-26-072 on April 20, 2026, reinstating the pre-2025 $25,000 subaward F&A threshold and the 10% de minimis indirect cost rate, rescinding flexibilities NIH had granted institutions a year earlier in NOT-OD-25-059. It has drawn far less attention than the 15% cap fight, but it changes real numbers on subaward budgets for institutions managing NIH-funded subrecipients now. See our full explainer on NOT-OD-26-072 for what changed and why it’s a distinct action from the capped-rate litigation above.
What this means for research administration offices
- Budget planning: the FY2026 topline is stable (a small increase, not a cut), so institution-wide NIH revenue projections built on a flat-to-slightly-up assumption held up better than the administration’s proposed 40% cut would have suggested — but individual investigators in terminated-award categories still faced real disruption regardless of the topline number.
- Award-level risk: a grant terminated on DEI/gender-identity grounds sits in active, procedurally complex litigation with jurisdictional splits between district court and the Court of Federal Claims — treat any specific award’s status as case-specific, not settled by the general litigation news.
- F&A/indirect-cost administration: the 15% flat-cap threat is legislatively blocked for now, but NOT-OD-26-072’s narrower subaward-threshold and de minimis-rate rollback is in effect and independent of that fight — don’t conflate the two when briefing PIs or finance offices.
Related background: Indirect Cost Rate (F&A Rate), MTDC (Modified Total Direct Cost), and Direct Cost vs. Indirect Cost.
