Congress Passes FY2026 Spending Bill, Blocks NIH Indirect Cost Cap

Congress has passed a bipartisan spending package for fiscal year 2026 that rejects the Trump administration's proposed 40 percent cut to the National Institutes of Health and explicitly blocks the controversial 15 percent cap on indirect cost reimbursement rates. The legislation allocates $47.2 billion to NIH — a $216 million increase over FY2025 — with an additional $1.5 billion for the Advanced Research Projects Agency for Health (ARPA-H).

NIH Funding Preserved Across All 27 Institutes

The spending package maintains the current statutory structure of all 27 NIH institutes and centers, rejecting proposed reorganization or elimination efforts. Several institutes received targeted increases:

• National Cancer Institute: $128 million increase
• National Institute of Neurological Disorders and Stroke: $155.6 million increase
• National Institute of General Medical Sciences: $25.3 million increase
• National Institute on Allergy and Infectious Diseases: $23 million increase
• National Center for Advancing Translational Science: $14 million increase

Congress also directed NIH to prioritize funding new awards over multi-year forward-funded arrangements — a provision that could mean more individual grants awarded in the coming cycle.

The Indirect Cost Cap Battle Is Over — For Now

The most consequential provision for research universities: Congress explicitly prohibited any federal agency from developing or implementing policies that would alter how negotiated indirect cost rates are applied. The legislation states that "no federal agency — including NIH — may develop or implement any policy, guidance, or rule" changing current indirect cost structures.

This language shuts down the administration's previous directive to cap indirect costs at 15 percent, which faced successful legal challenges. For universities and research institutions, this preserves the facilities and administrative cost recovery that funds everything from building maintenance to compliance offices.

The Education Package

The bill also allocates $79 billion in discretionary funding for the Department of Education, a $217 million increase. Pell Grants maintain their maximum at $7,395. TRIO programs, GEAR UP, and the Institute of Education Sciences ($790 million, far exceeding the $261 million request) all survived proposed cuts.

What Grant Seekers Should Watch

With NIH prioritizing new awards, the coming months may present expanded opportunities for first-time applicants and early-career researchers. The indirect cost protection means institutions can compete for NIH funding without worrying about a sudden reduction in overhead recovery. Monitor NIH Reporter for new funding opportunity announcements as the agency implements its FY2026 budget. Follow budget developments affecting research funding at grantedai.com.