Guide: NIH Salary Cap
What is the NIH Salary Cap?
The NIH salary cap is the maximum amount of an individual's institutional base salary that can be charged to an NIH grant. This cap is updated annually and applies to all senior/key personnel on NIH-funded projects.
When an individual's institutional base salary exceeds the NIH salary cap, the institution must cover the difference as cost-sharing. The NIH will only reimburse up to the capped amount based on the percentage of effort committed to the project.
How It Affects Budgeting
When preparing NIH grant budgets, research administrators must:
- Calculate the maximum allowable salary charge based on the current fiscal year's salary cap
- Determine over-the-cap amounts that will need to be covered by institutional funds
- Ensure accurate effort reporting that reflects both NIH-funded and institutionally cost-shared portions
- Track salary cap changes year-over-year for multi-year projects
Common Scenarios
Scenario 1: Salary Below Cap
An investigator with an IBS of $200,000 commits 10% effort. Since the salary is below the cap, the full amount can be charged: $200,000 × 0.10 = $20,000.
Scenario 2: Salary Above Cap
An investigator with an IBS of $300,000 commits 10% effort. With a cap of $225,700, the maximum NIH charge is: $225,700 × 0.10 = $22,570. The institution must cover the difference: ($300,000 - $225,700) × 0.10 = $7,430.
Scenario 3: 9-Month Appointments
For 9-month faculty, salaries are annualized to 12 months before applying the cap. A faculty member with a 9-month salary of $180,000 has an annualized salary of $240,000, which exceeds the cap.