how does luxury tax work nba

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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.

  • What happens if a team exceeds the luxury tax?

  • The penalties for exceeding the NBA luxury tax vary depending on bracket-based amounts for each dollar by which a team鈥檚 payroll exceeds the soft cap. Those brackets go from $5 million to $9,999,999, from $10 million to $14,999,999, then $15 million to $19,999,999 and above $20 million. How is the luxury tax calculated?

  • 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.

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