Small Entity vs. Micro Entity
The United States Patent and Trademark Office (USPTO) requires patent holders to pay filing, application, and maintenance fees. In order to encourage smaller firms to apply and hold patents, the USPTO provides for discounts on required fees to small and micro entities, as defined by the Code of Federal Regulations. Small or micro entity status must be verified and asserted prior to paying reduced fees. Small entities receive a 50% reduction on fees and micro entities receive up to a 75% reduction on fees. 
The USPTO provides an online fee schedule and includes a breakdown of fee types and fee amounts. In certain cases, small and micro entities receive equal discounts or no discount at all. 
Small Entity Status
Under Title 37, Code of Federal Regulations: Patents, Trademarks, and Copyrights, a small entity can be considered a person, a small business concern, or a nonprofit organization.  Certain standards must be met to be considered any of the three.
A person refers to the inventor of a patent or anyone with rights to the patent that has no obligation to nor has previously shared rights to the patent. A person who has shared or is under obligation to share rights to the patent may still qualify for small-entity status if those who will or have received rights also qualify as small entities.
Small Business Concern
A small business concern has not nor will not share rights to its patent with a company that is not also a small entity. Additionally, a business can have no more than 500 employees. Size status is reviewed by Small Business Administration officials, and questions regarding size standards can be addressed to: Small Business Administration, Size Standards Staff, 409 Third Street, SW., Washington, DC 20416.
To be considered a small entity, a nonprofit organization will not nor has previously shared rights to their patents with a company or person that does not qualify as a small entity as well. Any institution of higher education, located in the US or abroad, are considered can be considered for small entity status. Also, as specified in the Internal Revenue Code of 1986, any corporation or organization working only for "religious, charitable, scientific, testing for public safety, literary, or educational purposes" as well as for amateur sports may be considered for small entity status. A nonprofit organization may not contribute to political campaigns, personal profit, or lobbying efforts. 
Micro Entity Status
To be considered for micro entity status, the applicant must first qualify as a small entity. Subsequently, the following standards must be met:
- The applicant must not be named an inventor on more than 4 patent filings.
- The applicant must have made less than 3 times the median household income for the year prior to the year in which the patent fee is payable. Median household incomes will be reported by the Bureau of the Census.
- The applicant has not nor is under any obligation to share rights to the patent in question with an entity that has an income greater than 3 times the median household income.
For anyone employed by an institution of higher education, the institution must meet the standards set in Title 20: U.S. Code 1001  and the rights to any patents the employee holds have been or must be shared with such an institution.
For the full definition of micro entity, consult the United States code Title 35 - Patents, Section 123. 
- ↑ 1.0 1.1  '509 Payment of Fees', uspto.gov.
- ↑ 2.0 2.1  'USPTO Fee Schedule', uspto.gov.
- ↑ 3.0 3.1  '37 CFR 1.27 - Definition of small entities', Code of Federal Regulations, Cornell University Law School.
- ↑ 4.0 4.1  '26 U.S. Code 501 - Exemption from tax on corporations, certain trusts, etc.', U.S. Code, Cornell University Law School.
- ↑ 5.0 5.1  '20 U.S. Code 1001 - General definition of institution of higher education', U.S. Code, Cornell University Law School.
- ↑ 6.0 6.1  'Appendix L: Patent Laws', Manual of Patent Examining Procedure, uspto.gov.