how does luxury tax work nba

Best answer


How does the NBAluxurytaxwork? Simply put, the luxurytaxis 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 luxury tax in the NBA?

  • In the simplest terms, the luxury tax is an incremental tax owners have to pay for their teams going over the salary cap. The higher over the salary cap they go, the higher the annual tax they have to pay is.

  • Which teams are currently over the NBA’s luxury tax line?

  • Ten teams are currently over the NBA’s luxury tax line, which was set at $136.6m. Both Los Angeles franchises are involved, as too are last year’s champions the Milwaukee Bucks.

  • What is the salary tax rate in the NBA?

  • The exact tax rates depend on a few different factors. For starters, and rather obviously, how far above the salary cap a team鈥檚 roster is: For teams between $0 and $4,999,999 over the cap, the tax rate is $1.50 for every dollar over the cap. The incremental maximum for this level is $7.5 million.

  • What is the luxury tax and why does it matter?

  • The main deterrent team owners face when building their rosters is something that鈥檚 known as the luxury tax. In the simplest terms, the luxury tax is an incremental tax owners have to pay for their teams going over the salary cap. The higher over the salary cap they go, the higher the annual tax they have to pay is.

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