The United States Court of Appeals for the First Circuit has rejected the Trump administration’s proposed cuts to National Institutes of Health (NIH) research funding for indirect costs. In January of 2026, a three-judge panel ruled unanimously that prior attempts to cap reimbursement rates for overhead expenses at 15 percent of any given grant for universities and institutions engaged in medical and scientific research were unlawful. This prohibition upholds an earlier injunction by a district court, issued in agreement with a lawsuit by a coalition of over 20 states, the Association of American Medical Colleges (AAMC), and the Association of American Universities (AAU) in February of 2025. Presently, the appeal court’s decision dictates that previously negotiated reimbursement rates for costs to maintain the facilities, infrastructure, and administrative support for federally funded research cannot be displaced with a uniform rate.
