Indirect costs in federal grants and the de minimis rate
Indirect costs are shared overhead, such as rent, utilities, accounting and leadership, that cannot be tied to one project. Federal grants can pay a share of them through an indirect cost rate. Organizations with a negotiated rate use it; those without one may usually charge the de minimis rate, which the 2024 revision of the Uniform Guidance set at 15% of modified total direct costs.
Updated October 31, 2026
Direct and indirect costs
Direct costs belong to the project: staff who work on it, supplies, travel for it. Indirect costs keep your organization running across all its work. Federal grants can pay their fair share of both, but indirect costs have to be charged through a rate rather than item by item.
Negotiated rates and the de minimis rate
Larger organizations negotiate an indirect cost rate with their cognizant federal agency, the agency that gives them the most federal money. That rate then applies across their federal awards.
Organizations without a negotiated rate can usually use the de minimis rate instead. Under the 2024 revision of the federal Uniform Guidance, 2 CFR 200.414, it is 15% of modified total direct costs, a base that leaves out certain large costs such as equipment. Check the notice and the award terms for the rate and base that apply to you.
Why it matters when you choose a grant
A grant that caps indirect costs, or a budget that leaves them out, means your organization pays for that overhead some other way. When you compare opportunities, look at whether the notice limits indirect costs, and build them into your budget from the start. Our application guide covers the rest of the budget.
Questions people ask
What was the de minimis rate before?
It was 10% of modified total direct costs. The revised Uniform Guidance raised it to 15% for awards made under the new rules, which took effect in late 2024.
Can a program limit indirect costs?
Yes. Some programs cap indirect costs by law or regulation, and the notice of funding opportunity says so. Read it before you build your budget.