Background
Congress has legislatively mandated a provision limiting the direct salary an individual may receive from awards issued with Department of Health and Human Services (“DHHS”) funds. The salary limitation (“cap”) is currently restricted to Level II of the Executive Pay Schedule authorized by the U.S. Office of Personnel Management.
The Executive Level II pay rate increased from $212,100 to $221,900 effective January 1, 2024 as noted in NOT-OD-24-057.
See NIH's Salary Cap Summary page for previous rates and effective dates.
Guidelines and Procedures Statement
When an individual’s institutional base salary (“IBS”) * exceeds the salary cap, the difference between that individual’s salary and the maximum amount allowed under the cap is an unallowable cost and must be charged to a non-sponsored account. Salary in excess of the cap may not be charged to a regular cost sharing account. Total salary charged to sponsored projects, including cost sharing and salary cap accounts, will not exceed the individual’s UI salary.
To request a new salary cap account, departments should use the Request for General Ledger Chartfields & WhoKeys application in the Business & Financial Systems module of Employee Self Service.
*IBS is the annual compensation an individual receives for research, teaching, patient care and other activities, whether that individual's time is spent on research, teaching, patient care, or other activities. IBS excludes incidental pay and any income an individual is permitted to earn outside of the applicant organization. In the case of a joint UI/VA appointment, VA salary is included in the IBS calculation and cannot be used for cost sharing or funding unallowable salary cap costs.
Calculating the Salary Cap
Example 1:
PI with a 12-month appointment at an institutional base salary of $300,000 devoting 25% effort to grant 1-1234500
Charge to funded grant account 1-1234500 $221,900 x 25% effort = $55,475
Charge to salary cap account 3-1111111 ($300,000 x 25% = $75,000) - $55,475 = $19,525
Example 2:
PI with a 12-month appointment at an institutional base salary of $300,000 devoting 25% effort to grant 1-1234500 and cost sharing 5% effort
Charge to funded grant account 1-1234500 $221,900 x 25% effort = $55,475
Charge to cost sharing account 3-1234500 $221,900 x 5% effort = $11,095
Charge to salary cap account 3-1111111 ($300,000 x 30% = $90,000) – $55,475 – $11,095 = $23,430
Example 3:
PI with a 12-month appointment at an institutional base salary of $350,000, with UI salary of $300,000 and VA salary of $50,000, devoting 75% effort to grant 1-1234500 and cost sharing 5% effort:
Charge to funded grant account 1-1234500 $221,900 x 75% effort = $166,425
Charge to cost sharing account 3-1234500 $221,900 x 5% effort = $11,095
Charge to salary cap account 3-1111111 ($350,000 x 80% = $280,000) - $166,425 - $11,095 = $102,480.
Example 4:
PI with a 9-month appointment at an annualized* institutional base salary of $300,000 devoting 25% effort to grant 1-1234500 during the academic year and 100% effort for two summer months:
Charge to funded grant account 1-1234500
| $221,900/12 months x 9 x 25% effort = | $41,606 | |
| $221,900/12 months x 2 x 100% effort = | $36,983 | |
| --------- | ||
| $78,589 |
Charge to salary cap account 3-1111111
| $300,000/12 months x 9 x 25% effort = $56,250 - $41,606 = | $14,644 | |
| $300,000/12 months x 2 x 100% effort = $50,000 - $36,983 = | $13,017 | |
| -------- | ||
| $27,661 |
*Salary cap of $221,900 is based on a 12-month, full-time appointment.
Last updated: 01/29/2024