The Department of Health and Human Services (HHS) Salary Cap applies to the individual's institutional base salary. An individual's institutional base salary is the annual compensation that the applicant organization pays for an individual's appointment, whether that individual's time is spent on research, teaching, patient care, or other activities. The Congressional Act that appropriates funds for the Department of Health and Human Services (including the NIH, AHRQ, SAMHSA, HRSA, and CDC, among others) states that none of the funds may be used to pay an individual (via a grant, agreement, or other award mechanisms) in excess of a specified level on the Federal Executive Pay Scale, i.e., the Salary Cap.
How does the HHS Salary Cap affect the salary distribution of an individual?
Every year since 1990, Congress has legislatively mandated a provision for the limitation of salary. Each year, the Consolidated Appropriations Act issued by Congress includes this provision to restrict the amount of direct salary of an individual. As of December 23, 2011 the basis for the salary limit changed from Executive Level I to Executive Level II of the Federal Executive Pay Scale. This salary limitation applies to individuals under grants, agreements, or applicable contracts issued by HHS. This includes all agencies that are part of HHS such as, but not limited to, the National Institutes of Health (NIH), the Agency for Healthcare Research and Quality (AHRQ), Substance Abuse and Mental Health Services Administration (SAMHSA), Health Resources and Services Administration (HRSA), and Center for Disease Control (CDC). The limitation also applies to sub-awards that are issued with HHS funds as the prime source.
To ensure an individual's salary is not over the HHS salary limitation (cap), both the budgeting process and the salary charging process need to be monitored carefully. For example, an individual's effort on a grant is budgeted at 10%. Normally, the salary distribution on the grant for this individual would be set at 10%. If the individual's base salary is higher than the cap, charging 10% of his or her salary on the grant may result in over-the-cap salary. Thus, it is essential to consider the HHS salary cap when setting up the salary distribution for individuals whose base salaries are over the cap. What is equally important is to set the base salary of an individual to the cap in the grant budget when the individual's base salary is higher than the cap.
The most common errors in using the salary cap on proposal budgets:
- Assuming the cap refers only to salary requested, not the base salary. For instance, you might only be asking for $10,000 in PI salary on your HHS proposal, but if the base salary is higher than the cap, you will have to make an adjustment.
- Applying inflation to the salary cap in out years. The salary cap should remain flat across the budget years proposed. The cap should not be increased by an inflationary percentage.
- Not adjusting the salary cap to match the appointment - the salary cap is for a 12-month period. That means that the cap amount is reduced for the 9-month academic period.
- Not adjusting the salary cap to match the FTE level. The cap is for a 1.0 FTE. That means the cap is proportionally reduced for a .75 or .50 FTE.
Costing Guidance
- Proposal budgets: should use the cap in effect at time of submission
- Postaward expenditures: may use the cap in effect at the time of expenditure. A unit may optionally use a lower salary cap figure from the time of submission if the grant budget does not have funds to support a higher cap rate in subsequent years. This is providing additional voluntary cost share and allowable. However, in the unlikely event the salary cap is lowered in subsequent years, the lower rate must be used.
- Cost Sharing: The formulas on this page should be used to calculate cost share. Summer supplemental compensation may optionally be paid at the lower NIH capped hourly rate which eliminates the need for cost share.
Sample HHS Salary Cap calculations for your proposal budget
Please see the NIH Salary Cap Summary page for current salary limitations and additional guidance.
2023 Example 1: Individual with Full-Time Appointment (based on grant award/contract issued with $203,700 salary limitation)
| Base salary for a FULL-TIME (twelve-month) appointment | $250,000 |
| Research effort requested in application/proposal | 50% |
| Direct Salary Requested | $125,000 |
| ERE Requested (31.9% of salary) | $39,875 |
| TOTAL | $164,875 |
| To Calculate for the Salary Cap | |
| Direct Salary Requested (restricted to cap amount) | $203,700 |
| Research effort requested in application/proposal | 50% |
| Direct Salary Requested | $101,850 |
| ERE Requested (31.9% of allowable salary) | $32,490 |
| TOTAL TO BUDGET | $134,340 |
| Amount of Cost Share due to Cap, including ERE ($164,875 minus $134,340) | $30,535 |
2023 Example 2: Individual with Half-Time Appointment (based on a grant award/contract issued with $203,700 salary limitation)
| Base salary for a HALF-TIME (twelve-month) appointment | $125,000 |
| Research effort requested in application/proposal | 30% |
| Direct Salary Requested | $37,500 |
| ERE Requested (31.9% of salary) | $11,963 |
| TOTAL | $49,463 |
| To Calculate for the Salary Cap | |
| Salary Cap for HALF-TIME (twelve-month) appointment | $101,850 |
| Research effort requested in application/proposal | 30% |
| Direct Salary Requested (restricted to cap amount) | $30,555 |
| ERE Requested (31.9% of allowable salary) | $9,747 |
| TOTAL TO BUDGET | $40,302 |
| Amount of Cost Share due to Cap, including ERE ($49,463 minus $40,302) | $9,161 |
Salary Cap and Cost Share Calculators
| FY24 HHS Salary Cap Cost Share Worksheet: 1/1/2024 - 6/30/2024 | Excel |
| FY24 HHS Salary Cap Cost Share Worksheet: 7/1/2023 - 12/31/2023 | Excel |
| FY23 HHS Salary Cap Cost Share Worksheet: 1/1/2023 - 6/30/2023 | Excel |
| FY23 HHS Salary Cap Cost Share Worksheet: 7/1/2022 - 12/31/2022 | Excel |
| FY22 HHS Salary Cap Cost Share Worksheet: 1/1/2022 - 6/30/2022 | Excel |
| FY22 HHS Salary Cap Cost Share Worksheet: 7/1/2021 - 12/31/2021 | Excel |
Please contact Sponsored Projects Services with questions.