On April 20, 2026, the National Institutes of Health (NIH) issued Notice NOT-OD-26-072, implementing provisions tied to the Consolidated Appropriations Act, 2026. The notice was released without significant announcement or accompanying interpretation, yet it introduces important considerations for organizations performing on NIH awards.

A key feature of the notice is the explicit treatment of indirect costs (F&A)—an area that continues to receive increased attention at both the congressional and agency levels.

Key Implications for NIH Award Recipients

While the notice itself is concise, its practical implications are meaningful and warrant careful consideration.

1. Inability to utilize increased de minimis indirect cost rates

Recent updates to federal guidance have trended toward increasing the de minimis indirect cost rate to 15%. However, under this notice, NIH-funded activities are not positioned to benefit from those increases.

Organizations that:

• Do not have a negotiated indirect cost rate, or
• Were considering transitioning to a higher de minimis rate

should be aware that this flexibility is effectively limited for NIH awards under the current framework.

2. No expansion of the Modified Total Direct Cost (MTDC) base

The notice also reinforces constraints around the MTDC base, including existing thresholds and exclusions.

As a result:

• Organizations cannot expand the categories included in the MTDC base
• Existing limitations—such as subaward caps—remain unchanged
• Adjustments to reflect evolving cost structures are not permitted within this context

This limits the ability to align indirect cost recovery with actual cost drivers.

3. Constrained indirect cost recovery

Taken together, these provisions may result in:

• Reduced indirect cost recovery relative to broader Uniform Guidance trends
• Less flexibility in budget development and cost allocation strategies
• Increased need to absorb administrative and infrastructure costs outside of the award

For organizations with significant NIH funding, these constraints may have a measurable financial impact over time.

Broader Context

The use of appropriations language to influence indirect cost treatment is not new. However, its application through agency-level notices—rather than formal regulatory changes—can make these shifts less visible.

This approach allows for:

• Program-specific or agency-specific limitations
• Implementation without revisions to Uniform Guidance
• Incremental changes to cost recovery practices over time

Conclusion

Although issued without significant visibility, Notice NOT-OD-26-072 introduces clear limitations affecting indirect cost recovery on NIH awards.

Organizations should take note of the following:

• Increased de minimis rates are not applicable in this context
• MTDC base definitions and thresholds remain fixed
• Indirect cost recovery flexibility is more limited than broader federal guidance may suggest

Careful planning and review of current and future NIH-funded budgets will be important to account for these constraints.

Award Advisors will continue to monitor developments related to indirect cost policy and provide updates as additional guidance becomes available.