how does luxury tax work nba

Best answer

How does the NBA luxury tax work? Simply put,the luxury tax is a tool to help control team spending and try to even the playing field between the richer teams from the poorer.Every season the league determines a new luxury tax threshold the league.

People also ask

  • What is the NBA鈥檚 luxury tax?

  • The second arm of the NBA鈥檚 salary cap strategy comes into effect when teams are over a second limit. Rather than prohibit excessive spending, the NBA uses a luxury tax system that sets a separate threshold above the salary cap and applies a graduated payment system for every dollar above it. Currently this stands at between $1. 50 and $4.

  • How much is the luxury tax in the NHL?

  • And for teams $20,000,000 over the cap or above, the tax rate is $3.75 for every dollar over the cap, and increasing $0.50 for each additional $5,000,000 over $20,000,000. So, for a simple example, let鈥檚 say a team is $18 million over the cap. Their luxury tax would then be $38.5 million. Why?

  • How much does luxury tax cost for MLB teams?

  • Using the example of the two tiers above, if a team is $7 million over the threshold, that team would have to pay $11 million in luxury tax because $7.5 million is the incremental maximum of the first tier, plus an added on $3.5 million because of the $1.75 rate for the extra $2 million. Here鈥檚 a look at the luxury tax tiers.

  • Could the Boston Celtics become a luxury tax team this year?

  • However, Boston left open the door they could become a luxury tax team for this year via one happy scenario for the franchise: They win an NBA Championship.

    Leave a Comment