NIH Salary Cap
At the time of a proposal and during award management, the proposing Principal Investigator and/or Department is responsible for ensuring compliance with any salary limitations (caps) on sponsored project awards which may be imposed by sponsors. The most well known of the salary limitations is the NIH Salary Cap. The National Institutes of Health Salary Cap restricts the amount of salary that can be paid to an individual from an NIH grant.
The current capped rate in effect as of January 3, 2021, is $199,300.
What is the basis for the cap?
The cap is tied to levels of the Federal Executive Pay scale specified within the Consolidated Appropriations Act. Since FY 2001 the cap has been set at the Executive Level I, until December 23, 2011 when it was lowered to the Executive Level II.
How is the salary cap applied?
The cap establishes a maximum annual rate of pay at which an individual can be compensated for full time effort over a twelve-month period. Salary charges to a grant, cooperative agreement or contract from select agencies cannot be paid at a monthly rate that exceeds 1/12th of the maximum annual rate of pay then in effect.
The capped rate in effect as of January 3, 2021, is $199,300. This means that salary paid on new awards on or after January 7, 2020, cannot be paid for 1.0 FTE at a monthly rate that exceeds $16,608.33 ($199,300 / 12 = $16,608.33)
Links to the notices providing detailed information about the NIH Salary Cap and a list of rates is available on the NIH Salary Cap Summary page.
Should proposals be prepared using the actual or capped rate?
For traditional grant applications that include a detailed budget in the proposal, the actual institutional base salary should be shown for all individuals for whom funding is requested. It is also a good idea to provide an explanation indicating that the actual institutional base salary exceeds the current salary cap, and requested dollars are calculated based on the cap amount. This explanation can be placed in the budget justification.
For streamlined applications, including NIH Modular grant proposal submissions and all non-competing (continuation) submissions, the current capped rate should be used for calculating salary for any individual whose University rate of pay exceeds the capped rate.
Please also be aware at the time of proposal that the amount exceeding the cap will need to be paid from a non-federal source having no restriction that would preclude the payment of costs associated with the NIH-funded project.
How does the salary cap relate to effort?
Ordinarily, the salary chargeable to a sponsored project is the employee's rate of pay multiplied by the employee's level of effort on the project. Salary charges to a grant or contract subject to the cap cannot be paid at a monthly rate that exceeds 1/12th of the maximum capped annual rate of pay in effect, multiplied by the number of months of full-time effort being devoted to the project.
For example, if the University pays Dr. Jones an annual salary of $220,000 for a full-time fiscal year appointment, then her monthly rate of pay for full time effort (1/12th of the annual salary rate) is $18,333.33. Dr. Jones' salary exceeds the capped rate, which in calendar year 2021 is limited to a maximum of $199,300 for full-time effort. This equates to $16,608.33 per month (1/12th of the maximum allowable annual rate of pay for full-time effort under the NIH cap).
If Dr. Jones devoted 1.2 calendar months to a grant from NIH made with federal FY 2017 monies, she could charge at most $19,930 to the grant.
If Dr. Jones were able to devote 6 calendar months to the project, then a maximum of $99,650 could be charged to the grant.