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There is no single indirect-cost percentage that every university can charge to every federal research grant. In most cases, a university applies its federally negotiated rate to a specified cost base; eligible organizations without a current negotiated rate may be able to use a de minimis rate of up to 15% of modified total direct costs (MTDC). The agency, award terms, cost dates, and any special rules determine which rate applies.
What indirect costs cover
Indirect costs—also called facilities and administrative (F&A) costs—are shared expenses that support an organization’s operations but are not readily assigned to one specific project. The National Science Foundation (NSF) lists examples such as accounting, personnel, purchasing, rent, depreciation, and utilities. Institutions generally allocate these costs across federal awards using a rate applied consistently. NSF’s indirect cost policy
How a university’s rate is determined
Most organizations that recover indirect costs on federal awards use a negotiated indirect cost rate agreement (NICRA). The rate is generally negotiated with the federal agency that provides the organization’s largest share of federal funding. For colleges and universities, NSF says that agency is usually the Department of Health and Human Services (HHS) or the Office of Naval Research (ONR). NSF’s indirect cost policy
A NICRA specifies both a rate and a base to which that rate applies. The percentage alone does not tell you the dollar amount charged: a rate applied to MTDC, for example, is not applied to the full award total. A newly negotiated rate can also change during an award period; check the award’s terms to see how rate changes are handled.
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When the 15% de minimis rate may apply
Under the general Uniform Guidance framework described by NSF, an eligible recipient or subrecipient without a current federally negotiated indirect cost rate—including a provisional rate—may elect a de minimis rate of up to 15% of MTDC. This is an option for qualifying organizations, not a 15% ceiling on universities with negotiated rates. NSF’s indirect cost policy
NSF identifies transition dates for its awards under the updated rate. For new awards executed on or after October 1, 2024, recipients may elect the 15% rate unless the solicitation says otherwise. On existing awards, the rate may apply to costs incurred on or after October 1, 2024 if sufficient funds remain to meet project objectives; it cannot be applied retroactively to earlier costs. Review the solicitation and award terms before relying on this option.
Why NIH awards need an extra check
NIH’s policy history makes it especially important to verify the rule for the particular award. In February 2025, NIH issued NOT-OD-25-068, announcing a standard 15% indirect-cost rate for new and existing institutional awards, with go-forward application from February 10, 2025. NIH’s subsequent implementation notice said NIH would continue to honor NICRAs negotiated before October 1, 2024, and recognized the revised 15% de minimis rate for eligible non-SBIR/STTR awards.
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NIH’s FY 2026 Grants Policy Statement, revised in March 2026, provides current reimbursement guidance and special rates for certain award classes. For example, it describes an 8% MTDC rate for specified institutional training and career awards. The cited agency materials do not, by themselves, establish the definitive current court disposition or resolve every later agency-specific treatment of the 2025 announcement. Do not assume the announced 15% rate governs a particular NIH grant: check current NIH guidance, the award notice, and the institution’s sponsored-research office.
How to work out what applies to a grant
- Find the institution’s current rate agreement. Confirm the applicable rate, the base it uses, and whether the agreement is current. A provisional rate is also relevant when checking eligibility for the de minimis option.
- Identify the agency and award rules. The agency that negotiated the institution’s rate may differ from the awarding agency. Check the awarding agency’s current policy as well as the solicitation and award notice for a required rate or exception.
- Check award timing and cost dates. Determine whether the award is new or existing and when the costs will be charged. Transition provisions can distinguish costs incurred before and after a policy’s effective date.
- Confirm the cost base before comparing percentages. Identify whether the rate applies to MTDC or another base. MTDC is not the same as the full award amount, so two percentages are not comparable unless their bases match.
- Verify current agency and legal status. For NIH awards in particular, consult the current Grants Policy Statement, implementation notices, and award terms; ask the university’s sponsored-research office if the governing treatment is unclear.
What the NIH figures do—and do not—show
In its 2025 notice, NIH reported that in FY 2023 it provided more than $35 billion for almost 50,000 competitive grants, supporting more than 300,000 researchers at more than 2,500 institutions. NIH described approximately $26 billion as direct research costs and $9 billion as indirect costs. Those are NIH’s reported totals for that fiscal year; they are not a rate or a calculation for an individual university award. NIH notice NOT-OD-25-068
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