Examples
Worked examples
- Is an instance
A budget of $500,000 direct costs includes a $200,000 subaward; the MTDC base is $350,000 ($500,000 - $200,000 + $50,000), using the $50,000 per-subaward tranche in force since October 1, 2024.
- Is an instance
Equipment over $10,000 per unit is excluded from MTDC under the standard 2 CFR 200.1 threshold.
Counter-examples
Looks similar, but isn't
- Not an instance
Total Direct Cost (TDC) without modifications is a different base used by some non-federal sponsors.
- Not an instance
Total Project Cost (direct plus indirect) is not MTDC.
Editorial commentary
Modified Total Direct Cost (MTDC) is the base to which a US federal negotiated indirect cost (F&A) rate is applied. It is defined in 2 CFR 200.1, the definitions section of the Uniform Guidance, and it is a modification of total direct costs, not the award’s total dollar value — several real, budgeted cost categories on an award are excluded from the base before the indirect cost rate is ever applied.
What MTDC includes
MTDC starts from all direct costs budgeted or incurred on an award — salaries and wages, fringe benefits, materials and supplies, travel, and the first $50,000 of each subaward (raised from $25,000 by the 2024 Uniform Guidance revision, effective for awards issued on or after October 1, 2024; NIH reverted to $25,000 for its own awards via NOT-OD-26-072, April 2026) — and then subtracts the excluded categories below.
What is excluded from the MTDC base
Per 2 CFR 200.1, MTDC excludes: equipment (tangible personal property, including information technology systems, with a per-unit acquisition cost meeting the institution’s capitalisation threshold, currently $10,000 under the 2 CFR 200.1 definition) and other capital expenditures; the portion of each subaward in excess of the first $50,000; patient care costs; tuition remission; rental costs of off-site facilities; and participant support costs, including scholarships and fellowships. The full exclusion list, its regulatory sourcing, and how the resulting base feeds into the F&A rate calculation are covered in depth on Indirect cost recovery; this entry focuses on the base itself and what falls outside it.
Why the distinction matters
Because equipment, large subaward portions, and participant support costs are excluded, an award with a large equipment purchase or a large subaward recovers proportionally less indirect cost than its total budgeted value would suggest — a frequent source of confusion when comparing recovery figures across awards of similar face value. For example, a $500,000 direct-cost budget that includes a $200,000 subaward has an MTDC base of $350,000 ($500,000 total, minus the $150,000 portion of the subaward above the first $50,000), not $500,000 — the negotiated F&A rate applies only to that $350,000.
MTDC versus other cost bases
MTDC is not the only base a sponsor might specify. Total Direct Cost (TDC), used by some non-federal and foundation sponsors, applies the indirect rate to the full direct-cost figure with no exclusions. Total Costs (direct plus indirect combined) is a different figure again, describing the full cost of an award rather than a rate base. Where an institution has no current negotiated agreement, it may instead apply the de minimis rate to its MTDC base as a simplified alternative under 2 CFR 200.414(f).
References
- 2 CFR 200.1 (definitions, Uniform Guidance), law.cornell.edu/cfr/text/2/200.1.
- 2 CFR Part 200 Appendix III (Indirect Cost Rate Determination for Institutions of Higher Education).
Also known as
Modified Total Direct Cost · MTDC base
Machine-readable encodings
Use in your systems
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