The rate changed. Your budget did not.

Indirect cost is the least interesting paragraph in a federal budget narrative. It is one line, it is formulaic, and it is the part of the application that every writer under deadline copies forward from the last submission without reading. That is precisely why the money sits there uncollected.

In the 2024 revision to the Uniform Guidance, the Office of Management and Budget raised the de minimis indirect cost rate at 2 CFR 200.414 from ten percent to fifteen percent of modified total direct costs. The change took effect for awards issued on or after October 1, 2024. It was not a proposal, a pilot, or a waiver program. It was a rewrite of the number.

De minimis means what it sounds like. If your organization does not have a current federally negotiated indirect cost rate, you may elect to use the de minimis rate. You do not apply for it. You do not justify it with a cost allocation study. You elect it, you use it consistently, and you document that you elected it.

Fifteen percent instead of ten, on a modified total direct cost base of $260,000, is thirteen thousand dollars. Per award. Per year. For most of the organizations I work with, that is a part time program coordinator, or the audit, or the insurance, or the three things that never fit anywhere in a proposal because they are not a program.

The revision made a second change that gets even less attention. The modified total direct cost base now includes the first fifty thousand dollars of each subaward, raised from twenty five thousand. If your program runs through partners, that quietly enlarges the base the rate is applied to. Two changes compounding in the same direction, in the same paragraph nobody reads.

Now the part I most want you to know, because it is the one that gets argued.

Section 200.414 states that federal agencies and pass through entities may not require recipients or subrecipients to use an indirect cost rate lower than their negotiated rate or the rate they elected, unless a federal statute or regulation requires it. Read the exception carefully. It says statute or regulation. It does not say internal policy, and it does not say the way the department has always done it.

If you subaward from a county, a state agency, a school district, or a larger nonprofit, you have almost certainly been handed a number. Indirect is capped at eight percent. Indirect is capped at five. We do not pay indirect on this program. Sometimes there is a statute behind that and the cap is legitimate. Frequently there is a spreadsheet template from 2019 behind it and nobody has revisited the question, because in the entire history of that program no subrecipient has ever asked.

You are allowed to ask. The question is a single sentence, and it is not adversarial: Could you point me to the statute or regulation that establishes the indirect cost limitation for this award, so I can align our budget correctly?

Ask it in writing, early, before the budget is locked. Roughly half the time you will get a citation back and the cap is real, and now you know. The other half you will get a pause, and then a revised answer, and that pause is worth several thousand dollars a year to a small organization.

Three practical notes, because I would rather you do this correctly than aggressively.

If your organization already holds a negotiated rate, you use that rate. The de minimis election exists for organizations that do not have one. You cannot hold a negotiated rate and elect fifteen because you prefer the number.

Fifteen percent is a ceiling, not a requirement. You may elect a lower rate, and there are strategic reasons an organization sometimes does. What you should not do is elect a lower rate by accident, because the template said ten.

And apply it consistently. The de minimis rate is applied across your federal awards, not selected award by award depending on which budget felt tight.

Go pull the last three federal budgets your organization submitted. Look at the indirect line. If any of them say ten percent on an award issued after October 2024, you now know what that paragraph cost you, and you know exactly how to fix the next one.