Salary Cap

Limitations on grant salaries

An awarding agency may require a limitation on the amount of salary individuals may charge to issued awards requiring salary charged over the stated limitation to be recorded as unallowable.

The National Institutes of Health sets a limitation on salary that may be charged to an NIH award on an annual basis. Other agencies with limitations on salaries will reference the requirement in the award agreement.

The salary limitation also applies to cost share referenced in the proposal or award budget. Salary over the stated limitation applied to cost share must similarly be recorded as unallowable.

The calculation of the salary limitation and required unallowable portion of salary for an individual varies based on the person's appointment (institutional base salary) and the project on which the person is working.

The NIH typically announces new salary limitation figures in January of each year. Shortly after NIH releases the annual limitation, Indiana University will disseminate the new NIH salary limitation information, usually by March 1 of the current salary limitation year.

Read IU's policy on National Institutes of Health Salary Limitation

Determining salary limitation amount

To establish the individual salary limitation amount for a specific award, the following information must be determined:

  1. The individual's appointment (10-Pay, 12-Pay, Summer)
  2. The salary limitation
    • The NIH Salary Limitation information (Accessible 4/26/22) is listed on the ORA website
    • Other agencies with limitations on salaries will reference the requirement in the award agreement
  3. The current Institutional Base Salary (IBS) for the employee
  4. The percent of IBS effort (Direct Salary + Cost Share)
  5. The Allowable Percent = Salary Limitation / Institutional Base Salary

The total effort percentage charged to an award account (Direct Salary + Cost Share) is multiplied by the Allowable Percent to determine the allowable amount that can be to be applied to the award. The remainder is unallowable and must be applied to an INSxx subaccount. ORA provides a Salary Cap Calculator to assist in the determination of the allowable salary and required amount over the cap that must be applied to an "INSxx" subaccount.