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GrantsWhat is equipment under 2 CFR 200, and where is the threshold?
Source last checked: 1 September 2026
Under 2 CFR 200.1, equipment is tangible personal property with a useful life of more than one year and a per-unit acquisition cost at or above the lesser of your own capitalization level or $10,000. Anything below that line is not equipment, and the property rules in § 200.313 do not apply to it.
The definition: two tests, and both must be met
An item is equipment only if it clears both tests in § 200.1 at once: a useful life of more than one year, and a per-unit acquisition cost at or above the threshold. Fail either one and the item is not equipment for the purposes of Part 200, whatever your purchase order, your asset register or your programme officer calls it.
Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost that equals or exceeds the lesser of the capitalization level established by the recipient or subrecipient for financial statement purposes, or $10,000. See the definitions of capital assets, computing devices, general purpose equipment, information technology systems, special purpose equipment, and supplies in this section.
2 CFR Part 200, § 200.1 Definitions, page 9
That wording carries two traps, and the rest of this page is mostly about them: the threshold is not simply $10,000, and the cost it is measured against is not simply the invoice total. Source: 2 CFR Part 200 — Uniform Guidance, page 9 (PDF).
The threshold is the lesser of two numbers, so $10,000 is a ceiling
$10,000 is the highest the equipment line can ever sit. It is not the line itself. The definition requires the per-unit cost to equal or exceed the lesser of your own capitalization level for financial statement purposes, or $10,000. If your accounting policy capitalizes at $5,000, then $5,000 is your equipment threshold under a federal award, and the federal figure never comes into it.
The consequence runs the opposite way to most people's intuition: a stricter internal policy pulls more items into equipment, and raising your own capitalization level above $10,000 does nothing, because the federal figure then becomes the lesser of the two. Applied to one item, a sample-handling cart invoiced at $7,500 per unit:
| Your capitalization level | Threshold that applies | Is the $7,500 cart equipment? |
|---|---|---|
| $5,000 | $5,000 | Yes |
| $10,000 | $10,000 | No |
| $25,000 | $10,000 | No |
At a $5,000 capitalization level the cart is at or above the line and is equipment; at $10,000 it is below the line; and at $25,000 the federal figure becomes the lesser of the two, so the line stays at $10,000 and the cart is still below it. Two organisations can therefore buy the identical cart on identical awards and reach opposite answers, with both of them right. The table is our working of the rule, not a table printed in Part 200. Source for the rule: 2 CFR Part 200 — Uniform Guidance, page 9 (PDF).
What goes into the per-unit acquisition cost
The net invoice price, plus everything needed to make the item usable for the purpose it was bought for. Part 200 defines acquisition cost as the total cost of the asset including the cost to ready it for its intended use, and then spells out what that means for equipment specifically.
For example, acquisition cost for equipment means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired. [...] Ancillary charges such as taxes, duty, protective in transit insurance, freight, and installation may be included in or excluded from the acquisition cost in accordance with the recipient's or subrecipient's regular accounting practices.
2 CFR Part 200, § 200.1 Definitions, page 6
Note the asymmetry. Modifications and attachments that are necessary to make the item usable are in, and you have no discretion about it. Ancillary charges — tax, duty, freight, transit insurance, installation — are optional, settled by your own regular accounting practices rather than by Part 200.
Worked through on one purchase: a spectrometer invoiced at $9,200, with a $1,400 sample-handling attachment without which it cannot do the assay it was bought for, and $600 of freight. The attachment is necessary, so the cost is at least $9,200 + $1,400 = $10,600, which is over $10,000 before freight is even discussed. Had the attachment been a convenience rather than a necessity, the item would have sat at $9,200 and the freight treatment would have decided the outcome: include it and the unit cost is $9,800, exclude it and it is $9,200, and in both cases the item stays under a $10,000 threshold. So the question worth asking first is not how much the invoice came to, but which line items the equipment could not function without. Source for the rule: 2 CFR Part 200 — Uniform Guidance, page 6 (PDF).
General purpose and special purpose equipment: two different approval rules
Both are allowable as direct costs only with prior written approval, but the trigger differs sharply: general purpose equipment needs approval at any amount, while special purpose equipment needs it only where the unit cost is $10,000 or more. Getting this pair the wrong way round is how an otherwise allowable purchase turns into a questioned cost.
Part 200 splits the two by what the item can be used for, not by what it cost. General purpose equipment is equipment that is not limited to research, medical, scientific or other technical activities; the regulation illustrates it with ordinary office and building items, furnishings and motor vehicles among them. Special purpose equipment is equipment used only for research, medical, scientific or other similar technical activities, illustrated with instruments such as microscopes and spectrometers. Both lists in the text are illustrations rather than a closed set, which matters in practice: an item named in neither one is not thereby outside the rule, it is classified by the same use test as everything else. The definitions are at page 11 and page 16.
| General purpose | Special purpose | |
|---|---|---|
| Prior written approval as a direct cost | Required, with no dollar floor | Required at a unit cost of $10,000 or more |
| Test for which bucket it falls in | Not limited to research, medical, scientific or other technical activities | Used only for research, medical, scientific or other similar technical activities |
| Allowable as an indirect cost | No | No |
The last row catches people out, because it holds for equipment generally: equipment and other capital expenditures are unallowable as indirect costs. There is no route by which an unapproved purchase quietly becomes recoverable through the indirect rate. Improvements to land, buildings or equipment that materially increase their value or useful life also need prior written approval, whatever they cost. Sources: 2 CFR Part 200 — Uniform Guidance, § 200.439 on pages 86 (PDF) and 87 (PDF); definitions on pages 11 (PDF) and 16 (PDF).
Once an item is equipment, § 200.313 takes over
Title vests in you on acquisition, but conditionally: a clear title is withheld by the federal agency until the conditions in the award have been met, unless a federal statute specifically authorises the agency to vest title outright and the agency elects to do so. Three duties follow from that conditional title — use the equipment for the authorised purposes of the project while it is needed, do not dispose of or encumber it without approval while it is being used for its original purpose, and use and dispose of it under paragraphs (b), (c) and (e) of the section.
The management requirements in § 200.313(d) are the part auditors test, and they apply whether the item was bought wholly or only partly with award money. What they are for is traceability in both directions: an auditor should be able to take any item off a shelf and follow it back to the award that paid for it, and forward to what has happened to it since. So the property record carries identifying details such as a serial number and the FAIN alongside cost, location and condition, and a physical inventory reconciles those records against what is actually on the shelf at least once every two years. Around that sit duties to control loss, damage and theft, to maintain the property in working order, and to get the best return where you are authorised to sell. What each of those requires in detail is set out in § 200.313(d), page 43.
Disposition is where the $10,000 figure reappears, now measured on current fair market value rather than acquisition cost:
(1) Equipment with a current fair market value of $10,000 or less (per unit) may be retained, sold, or otherwise disposed of with no further responsibility to the Federal agency or pass-through entity.
(2) Except as provided in § 200.312(b), or if the Federal agency or pass-through entity fails to provide requested disposition instructions within 120 days, items of equipment with a current fair market value in excess of $10,000 (per-unit) may be retained or sold by the recipient or subrecipient. However, the Federal agency is entitled to an amount calculated by multiplying the percentage of the Federal agency's contribution towards the original purchase by the current market value or proceeds from the sale.
2 CFR Part 200, § 200.313(e), pages 43 and 44
Where equipment is sold, the agency or pass-through entity may permit you to keep $1,000 of the proceeds out of the federal share to cover selling and handling expenses. Two further points are easy to miss: you may not use award-funded equipment to provide services for a fee below what a private company would charge for similar services, for as long as the federal government retains an interest in it; and when buying replacement equipment you may trade in or sell the old item and put the proceeds against the replacement. Sources: 2 CFR Part 200 — Uniform Guidance, pages 42 (PDF), 43 (PDF) and 44 (PDF).
Who the § 200.313 management rules actually bind, and who they do not
They do not bind every recipient. § 200.313(b) hands States and Indian Tribes out of the detailed paragraphs: a State must use, manage and dispose of equipment acquired under a federal award in accordance with State laws and procedures, and Indian Tribes in accordance with tribal laws and procedures, falling back on the guidance in the section only where such laws and procedures do not exist. Everyone else — including subrecipients of a State or of an Indian Tribe — must follow paragraphs (c) through (e).
That last clause is the one worth reading twice. Being passed money by a State does not inherit the State's exemption. A city, university or non-profit holding a subaward from a State agency is in paragraphs (c) through (e) in full, property records, biennial physical inventory and all, even though its pass-through entity is not. Separately, title to federally owned property never vests in you at all: it remains with the federal government under § 200.312, which requires an annual inventory listing to the agency or pass-through entity, and disposition instructions on completion of the award or when the property is no longer needed. Sources: 2 CFR Part 200 — Uniform Guidance, pages 42 (PDF) and 43 (PDF).
What this guide does not cover
This page carries the equipment definition in § 200.1 and the equipment rules in § 200.313, and nothing else. Four neighbouring regimes are commonly mistaken for it:
- Supplies, § 200.314. The unit of measurement changes, and this is the single most common error. Equipment disposition is tested per unit on fair market value. The supplies rule bites on a residual inventory of unused supplies exceeding $10,000 in aggregate value at the end of the period of performance, where the aggregate consists of all supply types and not just like items. Same figure, entirely different arithmetic.
- Real property, § 200.311. Land and buildings sit in their own section of the Property Standards and are not reached by § 200.313.
- Federally owned and exempt property, § 200.312. Where title stays with the federal government, or has been vested in you outright by statute and award terms, the rules differ from conditional title.
- Intangible property, § 200.315. Title vests on acquisition, but disposition routes back through § 200.313(e) rather than being governed by it directly.
The boundary with our other two guides on this regulation is also by section, not by topic. 2 CFR Part 200 (Uniform Guidance): what it covers and who it binds deals with the scope of the part as a whole and which recipients fall inside it, and which clauses must go into a contract paid with federal grant money deals with Appendix II. Neither restates the equipment threshold, and this page does not restate their material. Sources: 2 CFR Part 200 — Uniform Guidance, pages 39 (PDF), 42 (PDF) and 44 (PDF).
Frequently asked questions
Is the equipment threshold under 2 CFR 200 $5,000 or $10,000?
Neither figure is the answer on its own. The threshold is the lesser of the capitalization level your organisation has established for financial statement purposes, or $10,000 per unit. $10,000 is the highest it can be. If your own capitalization level is $5,000, then $5,000 is your threshold, and the $5,000 figure you may have seen quoted elsewhere is a reflection of older practice rather than the number in the text in force.
Does 2 CFR 200 treat a laptop as equipment?
Only if its per-unit acquisition cost reaches your threshold and it has a useful life of more than one year. Part 200 defines computing devices separately, as machines that acquire, store, analyze, process and publish data electronically, including peripherals, and cross-refers to the definitions of supplies and information technology systems. That separate definition does not change the equipment test, which still turns on cost per unit and useful life. A single laptop below your threshold is not equipment, and buying twenty of them does not combine into one unit.
Do I need prior approval to buy equipment with federal grant money?
For general purpose equipment, yes, with no dollar floor: capital expenditures for general purpose equipment, buildings and land are allowable as direct costs only with the prior written approval of the federal agency or pass-through entity. For special purpose equipment the approval requirement starts at a unit cost of $10,000 or more. Improvements to land, buildings or equipment that materially increase value or useful life also need prior written approval regardless of amount.
How often does a physical inventory of grant-funded equipment have to be taken?
At least once every two years, and the results must be reconciled with your property records. The requirement applies regardless of whether the equipment was acquired in part or in its entirety under the federal award. States and Indian Tribes follow their own laws and procedures instead, but subrecipients of a State or an Indian Tribe do not inherit that exemption and must meet the requirement in full.
What happens to grant-funded equipment when the project ends?
If it is still needed for other activities currently or previously supported by a federal agency, the disposition rules are not yet in play and the order of priority for further use runs first to other awards from the agency that funded it, then to awards from other federal agencies. Once it is genuinely no longer needed, request disposition instructions if the award terms require it. Equipment with a current fair market value of $10,000 or less per unit can be retained, sold or otherwise disposed of with no further responsibility. Above that, the agency is entitled to its percentage share of the current market value or sale proceeds.
Can equipment be charged as an indirect cost?
No. Equipment and other capital expenditures are unallowable as indirect costs under 2 CFR 200.439. If an equipment purchase was not approved as a direct cost where approval was required, there is no indirect route that makes it recoverable afterwards.
Does the $10,000 disposition figure mean the same thing as the $10,000 in the definition?
No, and conflating them is a common mistake. The figure in the definition is tested against per-unit acquisition cost at the time you acquire the item. The figure in the disposition rule is tested against current fair market value per unit at the time you dispose of it. An item that was equipment on acquisition can fall below $10,000 in fair market value years later and be disposed of freely.
Related guides
- 2 CFR Part 200 (Uniform Guidance): what it covers and who it binds
- What counts as modified total direct costs under 2 CFR 200?
- When does a federal award recipient need a single audit?
- Which clauses must go into a contract paid with federal grant money?
Stop re-reading the same funding rules
Scalebiz watches federal, EU and UK funding and procurement, and cites every answer to the regulation it came from. 14 days, no card.
Start the 14-day trialSource. 2 CFR Part 200 — Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 2025 CFR edition, revised as of 1 January 2025, as published by the U.S. Government Publishing Office: CFR-2025-title2-vol1-part200.pdf. Every page number cited on this page is a page of that PDF, and each citation links straight to it. Page numbers are cited rather than section labels because the section headers in our extract of the PDF do not always line up with the paragraph on the page.
This guide describes 2 CFR Part 200 as revised in 2024 (89 FR 30046, effective 1 October 2024), which is the text in force today. OMB published a proposed rewrite on 29 May 2026 (91 FR 32198, docket OMB-2026-0034); the comment period closed on 13 July 2026. OMB signalled a target effective date of 1 October 2026, but as of 28 September 2026 no final rule had been published in the Federal Register, and the proposal has no legal effect until it is finalised. Checked against the source on 28 September 2026.
Rechecked on 13 October 2026: Federal Register document 2026-10817 (91 FR 32198, published 29 May 2026) is still published as a proposed rule, carries no effective date and no superseding final rule, and comments are closed — Regulation for Federal Financial Assistance (verified live 13 October 2026). This guide is therefore written on the text in force, not on the proposal.
Written by Robert Grabarević, founder of Scalebiz. He built the radar as a tool for himself, so that he would not have to re-read the same funding rules for every application. Every guide on this site cites the regulation by section or page, so each claim can be checked against the source. About Scalebiz · Robert on LinkedIn.