--- title: What is the De Minimis Rate and Who Can Elect to Use It? description: Learn what the de minimis rate is, who can elect to use it, recent changes under 2 CFR 200, and why for-profit entities are excluded. image: https://info.redstonegci.com/hubfs/RGCI%20-%20What%20is%20the%20De%20Minimis%20Rate%20and%20Who%20Can%20Elect%20to%20Use%20It.png --- [ PAY INVOICE](https://redstonegci.com/invoice-payment/) [Call Us Today 256-704-9800](tel:2567049800) [info@redstonegci.com](Mailto:info@redstonegci.com) [![Redstone_Logo](https://info.redstonegci.com/hubfs/redstone%20logo%20version%201%20-%20rgb-1.png)](https://www.redstonegci.com/) # What is the De Minimis Rate and Who Can Elect to Use It? [Posted by Lynne Nalley and John Shire on Mon, Jul 21, 2025 @ 11:07 AM](https://info.redstonegci.com/blog/author/lynne-nalley-and-john-shire) - [Tweet](https://twitter.com/share) ![RGCI - What is the De Minimis Rate and Who Can Elect to Use It](https://info.redstonegci.com/hs-fs/hubfs/RGCI%20-%20What%20is%20the%20De%20Minimis%20Rate%20and%20Who%20Can%20Elect%20to%20Use%20It.png?width=1000&height=571&name=RGCI%20-%20What%20is%20the%20De%20Minimis%20Rate%20and%20Who%20Can%20Elect%20to%20Use%20It.png) The de minimis rate is an indirect rate that can be elected by Non-federal entities (State, local government, Indian Tribe, Institution of Higher Education or non-profit) that do not have a current negotiated indirect cost rate agreement (NICRA). The de minimis rate is addressed in [2 Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards](https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200), specifically [200.414(f)](https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E/subject-group-ECFRd93f2a98b1f6455/section-200.414). Did we leave someone out? Of course, what about for-profit entities? As the [Federal Acquisition Regulations (FAR)](https://www.acquisition.gov/browse/index/far) do not address the de minimis rate, for-profits do not get this option, so we will talk about for-profit entities in the section below. The purpose of the de minimis rate is to recoup all or a portion of indirect costs and thereby reduce the administrative burden of submitting NICRAs. No documentation is required. Once elected, it must be used on all federal awards until such time as a NICRA is submitted/negotiated. We generally see the de minimis rate elected by an entity on its first grant or if they have minimal indirect costs. Non-profit companies that use the direct cost allocation principles generally have minimal indirect costs and commonly elect the de minimis rate. See our article on direct allocations, “[What are the Benefits of 2 CFR 200.405(d) Direct Allocations?](https://info.redstonegci.com/blog/what-are-the-benefits-of-2-cfr-200.405d-direct-allocations)” ## Has the De Minimis Rate Increased? Yes, effective October 1, 2024, for new federal awards, 200.414(f) was revised so that recipients and subrecipients that don’t have a current Negotiated Indirect Cost Rate (NICRA) may elect a de minimus rate of **up to** 15 percent of Modified Total Direct Cost (MTDC). Prior to October 1, 2024, non-federal entities could elect to use a de minimis rate of 10% of MTDC. The prior regulation did not include the “up to” language. It is our interpretation that the de minimis rate, if elected, is not automatically 15%, especially if your indirect costs are less than 15% of the MTDC. Recipients will need some justification to support the “appropriate rate” up to the 15% limit when the election is made. ## Do the Regulations Allow For-Profit Companies to Elect the De Minimis Rate? For-profit companies that receive grants follow all of the 2 CFR 200 requirements except for [Subpart E, Cost Principles](https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E). While 2 CFR 200 does not make it clear as to the cost principles for for-profit entities, the FAR does. [FAR 31.103 Contracts with commercial organizations](https://www.acquisition.gov/far/31.103) require for-profit companies to follow the cost principles in FAR subpart 31.2. Since the election of the de minimis rate is in 200.414(f) Cost Principles in Subpart E, and this section is not applicable to for-profit companies that receive Federal awards, for-profit companies cannot elect the use of the de minimis rate. DOE’s supplement has conflicting language that leads you to believe for-profit companies can use the de minimis rate. [2 CFR 910.510(b)(6) Financial statements](https://www.ecfr.gov/current/title-2/subtitle-B/chapter-IX/part-910/subpart-F/subject-group-ECFRc420433389ca503/section-910.510) state the financial statement notes should indicate whether or not the for-profit entity elected to use the 10% de minimis cost rate in 2 CFR 200.414. However, [2 CFR 910.352 Cost Principles](https://www.ecfr.gov/current/title-2/subtitle-B/chapter-IX/part-910/subpart-D/section-910.352) states that For-profit entities must follow the Cost Principles in 48 CFR 31.2 in lieu of the Cost Principles in 2 CFR 200.400 through 200.476, which is where the de minimis rate election is addressed. Based on our interpretation of 2 CFR 200 and agency guidance, for-profit companies must apply the FAR 31.2 Cost principles, in which case the de minimis rate election is not an option. ## De Minimis is Not the Same as the 15% Indirect Rate Cap Don’t confuse the 15% de minimis with the proposed 15% cap on indirect costs in National Institute of Health Grants and the 10% or 15% cap on DOE grants. At this time, there are legal challenges filed halting the enforcement of this guidance. See our three articles for more information: [NIH Focuses on Indirect Costs, and DoD May Not Be Far Behind](https://info.redstonegci.com/blog/nih-focuses-on-indirect-costs-and-dod-may-not-be-far-behind); [DOE Expands Indirect Cost Limits to State and Local Governments, Non-Profits, and For-Profit Organizations](https://info.redstonegci.com/blog/doe-expands-indirect-cost-limits-to-state-and-local-governments-non-profits-and-for-profit-organizations); [Changes Ahead for University Grants as DOE Limits Indirect Costs to a 15% Rate Cap](https://info.redstonegci.com/blog/changes-ahead-for-university-grants-as-doe-limits-indirect-costs-to-a-15-rate-cap). ## Takeaways As you know, the 2 CFR 200 regulations can be complicated, and this is especially the case with the use of the de minimis rate. Most grants just reference the 2 CFR 200 regulations, and you are responsible for complying with any regulation that applies to your grant (if you can find it). If you are using the 15% de minimis rate, make sure you have indirect costs that support it. Remember, the de minimis rate can be “up to” 15%. For-profit companies do not qualify for the de minimis rate since 200.414 is not applicable to for-profit grants. ## Meeting Pre- and Post-Award Grant Compliance Requirements Redstone Government Consulting, Inc. supports organizations in meeting [grant compliance requirements both before and after award](https://redstonegci.com/2-cfr-200-consulting-grants-and-cooperative-arrangements/). Our team of experts assists with drafting and reviewing accounting and procurement policies, preparing and reviewing quarterly financial reports, and [developing property management procedures](https://redstonegci.com/consulting/dfars-business-systems/government-property-management-system/). We also offer practical tools such as templates for contractor versus subrecipient determinations, risk assessment checklists, and monitoring documentation. For organizations managing subawards, we provide third-party subrecipient monitoring, help resolve audit findings and [offer monthly accounting support](https://redstonegci.com/consulting/operational-support-services/accounting-services-support/) or [guidance in structuring compliant accounting systems](https://redstonegci.com/consulting/government-compliance/accounting-system-compliance/). Additionally, our team of experts delivers [training sessions on critical topics under 2 CFR 200](https://redstonegci.com/2-cfr-200-consulting-grants-and-cooperative-arrangements/). [![Learn More About Our Grants & Cooperative Agreement Services](https://no-cache.hubspot.com/cta/default/203971/interactive-168706361951.png) ](https://info.redstonegci.com/hs/cta/wi/redirect?encryptedPayload=AVxigLIZAZ94kmfTVbzGTrFDdh9FSkEKuNgyHqu8DdnKWPRVN9pfL06%2Fu7JpaWns%2FPZweUEutYE8%2FU%2BQosYBqy3ciure5QUsYXqW1dNhGm%2BZm6Quu3KVwTHwnQhg0%2F2a%2B1xhGFCZKDeNVPhn%2B0eMJNzPRUfkMaUMMG7F5f4iZLwM6%2FD%2F7mLT8x0u58v7OlpDl5vBFivHiXpnVE%2FbsKHR%2BRLOwtPoKhdYADmL8CkAteB31VlqOoNqzA%3D%3D&webInteractiveContentId=168706361951&portalId=203971) ### Written by [Lynne Nalley and John Shire](https://info.redstonegci.com/blog/author/lynne-nalley-and-john-shire) Lynne Nalley and John Shire ## About Redstone GCI Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals. Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs. One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle. Topics: [Accounting System Compliance](https://info.redstonegci.com/blog/topic/accounting-system-compliance), [DCAA Audit Support](https://info.redstonegci.com/blog/topic/dcaa-audit-support), [Government Regulations](https://info.redstonegci.com/blog/topic/government-regulations), [Federal Acquisition Regulation (FAR)](https://info.redstonegci.com/blog/topic/federal-acquisition-regulation-far), [Grants & Cooperative Agreements (2 CFR 200)](https://info.redstonegci.com/blog/topic/grants-cooperative-agreements-2-cfr-200) ### Search Posts This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. ### Subscribe via E-mail ### Latest Posts ### Posts by category - [Accounting System Compliance (282)](https://info.redstonegci.com/blog/topic/accounting-system-compliance) - [Commercial Determination (34)](https://info.redstonegci.com/blog/topic/commercial-determination) - [Contractor Purchasing System Review (CPSR) (85)](https://info.redstonegci.com/blog/topic/contractor-purchasing-system-review-cpsr) - [Contracts & Subcontracts Administration (300)](https://info.redstonegci.com/blog/topic/contracts-subcontracts-administration) - [Cost Accounting Standards (CAS) (60)](https://info.redstonegci.com/blog/topic/cost-accounting-standards-cas) - [COVID-19 (23)](https://info.redstonegci.com/blog/topic/covid-19) - [Customer Success Story (2)](https://info.redstonegci.com/blog/topic/customer-success-story) - [Cybersecurity (28)](https://info.redstonegci.com/blog/topic/cybersecurity) - [DCAA Audit Support (249)](https://info.redstonegci.com/blog/topic/dcaa-audit-support) - [Defense Procurement & Acquisition Policy (DPAP) (7)](https://info.redstonegci.com/blog/topic/defense-procurement-acquisition-policy-dpap) - [Deltek Costpoint (54)](https://info.redstonegci.com/blog/topic/deltek-costpoint) - [DFARS Business Systems (179)](https://info.redstonegci.com/blog/topic/dfars-business-systems) - [DOD IG (10)](https://info.redstonegci.com/blog/topic/dod-ig) - [Employee & Contractor Compensation (22)](https://info.redstonegci.com/blog/topic/employee-contractor-compensation) - [Employers & Unions (8)](https://info.redstonegci.com/blog/topic/employers-unions) - [Estimating System Compliance (18)](https://info.redstonegci.com/blog/topic/estimating-system-compliance) - [Export & Import (19)](https://info.redstonegci.com/blog/topic/export-import) - [Federal Acquisition Regulation (FAR) (187)](https://info.redstonegci.com/blog/topic/federal-acquisition-regulation-far) - [Federal Construction Contracting (4)](https://info.redstonegci.com/blog/topic/federal-construction-contracting) - [Government Compliance Training (59)](https://info.redstonegci.com/blog/topic/government-compliance-training) - [Government Property Management (18)](https://info.redstonegci.com/blog/topic/government-property-management) - [Government Regulations (265)](https://info.redstonegci.com/blog/topic/government-regulations) - [Government Shutdown (9)](https://info.redstonegci.com/blog/topic/government-shutdown) - [Grants & Cooperative Agreements (2 CFR 200) (32)](https://info.redstonegci.com/blog/topic/grants-cooperative-agreements-2-cfr-200) - [Human Resources (118)](https://info.redstonegci.com/blog/topic/human-resources) - [Incurred Cost Proposal Submission (ICP/ICE) (83)](https://info.redstonegci.com/blog/topic/incurred-cost-proposal-submission-icp-ice) - [Litigation Consulting Support (17)](https://info.redstonegci.com/blog/topic/litigation-consulting-support) - [Manufacturing Operations Consulting (26)](https://info.redstonegci.com/blog/topic/manufacturing-operations-consulting) - [Material Management & Accounting System (MMAS) (23)](https://info.redstonegci.com/blog/topic/material-management-accounting-system-mmas) - [Non-US Government Contractor (3)](https://info.redstonegci.com/blog/topic/non-us-government-contractor) - [Office of Federal Contract Compliance Programs (31)](https://info.redstonegci.com/blog/topic/office-of-federal-contract-compliance-programs) - [Organizational Change Management Consulting (17)](https://info.redstonegci.com/blog/topic/organizational-change-management-consulting) - [Paycheck Protection Program (PPP) Loans (8)](https://info.redstonegci.com/blog/topic/paycheck-protection-program-ppp-loans) - [Program Management & Project Cost Control (2)](https://info.redstonegci.com/blog/topic/program-management-project-cost-control) - [Proposal Cost Volume Development & Pricing (79)](https://info.redstonegci.com/blog/topic/proposal-cost-volume-development-pricing) - [Quickbooks (21)](https://info.redstonegci.com/blog/topic/quickbooks) - [REAs, Claims & Terminations (10)](https://info.redstonegci.com/blog/topic/reas-claims-terminations) - [Redstone GCI (50)](https://info.redstonegci.com/blog/topic/redstone-gci) - [Sequestration (4)](https://info.redstonegci.com/blog/topic/sequestration) - [Service Contract Act (14)](https://info.redstonegci.com/blog/topic/service-contract-act) - [Small Business Compliance (121)](https://info.redstonegci.com/blog/topic/small-business-compliance) - [System Award Management (SAM) (9)](https://info.redstonegci.com/blog/topic/system-award-management-sam) - [UKG Ready HR Software Consulting (7)](https://info.redstonegci.com/blog/topic/ukg-ready-hr-software-consulting) - [Unanet (35)](https://info.redstonegci.com/blog/topic/unanet) - [Vlog (41)](https://info.redstonegci.com/blog/topic/vlog) ### Disclaimer *Data published on our website, such as our white papers, blogs and other government contracting commentary reflect our interpretations and opinions of current events and regulations, at the time such data is published, and the perspectives/opinions of other professionals in our industry may vary from our own.  Further, our commentary and perspectives do not reflect legal analyses, since we are not attorneys, but rather government contracts and accounting advisors.  We therefore make no representation that the use of our published information will insulate a company from government challenges, nor otherwise ensure a successful defense on any government procurement adverse action.  Readers agree that articles or blog commentary presented within our website shall not be replicated or re-published without requesting before publication in another medium, and our expressed written consent to do so.* **Redstone Government Consulting** 501 Madison Street SE, Suite 100 Huntsville, AL 35801 **Phone: ** [256.704.9800](tel:2567049800) **Email Us**[ info@redstonegci.com](mailto:info@redstonegci.com) **[PAY INVOICE](https://redstonegci.com/invoice-payment/)** [PCI DSS compliance documentation](https://redstonegci.com/wp-content/uploads/2016/10/pci_dss_self_assessment_certificate.pdf) © 2026 Redstone Government Consulting | All Rights Reserved | [Privacy Policy](https://redstonegci.com/privacy-policy/) | [Event Refund / Cancellation Policy](https://redstonegci.com/event-refund-cancellation-policy/)