Written by Justo Torres

The National Institutes of Health (NIH) salary cap is a statutory limit imposed by Congress on the amount of direct salary an individual may receive under an NIH grant, cooperative agreement or contract. Since 1990, this mandate has ensured that federal funds are distributed equitably while limiting the government’s contribution to high-level institutional salaries.

The 2026 Salary Cap Level

For the 2026 federal fiscal year, the NIH has announced that the salary limitation is tied to Executive Level II of the Federal Executive Pay Scale. Effective January 1, 2026, the NIH salary cap has increased to $228,000. This is a slight increase from the 2025 cap of $225,700.  In a higher education setting, it is critical to understand that this is a 12-month cap. For 9-month faculty positions, the amount needs to be prorated. In other words, the 9-month NIH salary is actually $171,000.00.

How the Cap Works

The “cap” does not limit the actual salary an institution can pay its employees; rather, it limits the amount the institution can charge to an NIH award. If an investigator’s institutional base salary (IBS) exceeds the cap, the organization must cover the difference using non-federal funds.

• Direct and Indirect Salaries: As of late 2024, the mandate applies to both direct salaries (researchers working on projects) and certain indirect salaries within cost pools.
• Rebudgeting: For active awards issued in previous years that were restricted to Executive Level II, institutions may often rebudget funds to accommodate the new $228,000 rate, provided funds are available. However, the NIH does not provide additional funds to cover the increase.
• Proposals: When submitting budgets, applicants should generally list the actual IBS. The NIH will then apply the cap at the time of the award.

Staying compliant requires rigorous internal tracking to ensure no federal dollars are used to exceed the daily or annual rate of the current Executive Level II limit.