Ten NBA teams are still operating in luxury tax territory in the wake of last Thursday’s trade deadline, but this season’s total projected luxury tax payments – and the clubs projected to be taxpayers – have declined significantly in recent weeks.
As of January 23, a total of 14 teams projected to be taxpayers, Bobby Marks of ESPN (Twitter links) observes, with the 16 non-taxpayers on track to receive about $17.8MM apiece, which would have been the largest payout in NBA history.
But the Cavaliers, Pelicans, Clippers, and Sixers all ducked the tax line with their pre-deadline moves, while a few other teams remained in the tax but took steps to significantly reduce their end-of-season bills. Milwaukee, for instance, had been projected to pay about $74.8MM in tax penalties, but has since reduced that figure by more than half, according to Eric Pincus of Sports Business Classroom.
Here are the current projected tax penalties, per Pincus’ data:
- Phoenix Suns: $152.26MM
- Minnesota Timberwolves: $84.85MM
- Boston Celtics: $53.45MM
- Los Angeles Lakers: $52.53MM
- New York Knicks: $36.45MM
- Milwaukee Bucks: $32.66MM
- Denver Nuggets: $20.36MM
- Golden State Warriors: $12.36MM
- Dallas Mavericks: $6.39MM
- Miami Heat: $4.18MM
Total: $455.49MM
These numbers will fluctuate a little before the end of the season. For instance, the Lakers recently increased their projected bill when they signed Alex Len to a rest-of-season contract, and the Warriors will need to make multiple roster additions in the near future, which will cause their bill to rise. Various contract incentives that go earned or unearned could also impact the end-of-season tax figures.
Based on the current figures from Pincus, each non-taxpayer is projected to receive a payout of about $11.4MM. That figure is determined by cutting the total league-wide tax penalties in half, then dividing them evenly among the non-taxpaying teams (in this case, 20 clubs).
As significant as the Suns’ tax penalty projects to be, especially for a team currently flirting with .500, it won’t be a single-season record — Golden State has actually exceeded $152.26MM in tax payments in each of the past three years (2022-24).
Assuming these are the 10 teams that finish the season in tax territory, the Celtics, Nuggets, Warriors, Clippers, Lakers, Bucks, and Suns would all be subject to repeater penalties in 2025/26 if they’re taxpayers again next season.
Sucks to have that sort of tax bill with a record under .500 and looking up at play-in. Durant gone this summer…guessing Rockets red.
The Suns are 26-28 and $152MM! James Jones will get to address this in future interviews.
Yes, its amazing that the Suns have that size of a bill, and might miss the playoffs and have traded most of their draft picks away
Wow… 7 of those teams have no shot at competing…
Cavaliers were smart to duck the tax for a season…
7? Nuggets, Knicks, Celtics, Lakers all have a shot at competing. I assume you mean “competing” for a championship?
Wolves, Bucks and Warriors will also likely make the playoffs, and you never know what can happen in a series at that point.
Mavs, Suns and Heat are definitely going nowhere.
Mavs/Suns/Warriors/Bucks = old and over rated
Heat/Wolves = Not enough star power
Knicks = Thibs
Has Thibs won anything? Hum…No. Maybe overrated??
He’s old but the team isn’t…
I actually think the Knicks are the closest out of the list…
But the Thibs injury history speaks for itself
“T.J. Warren had a franchise-record 47 pts for the Westchester Knicks on Friday in their win over Canton (CLE). “I have a lot of respect for what he’s doing,” Tom Thibodeau said of Warren, a 9-year NBA vet. Warren has spent the season in Westchester after being waived by NYK at the end of the preseason. Thibodeau was asked about Warren on Saturday prior to Knicks-Celtics. “He’s had a terrific year and he’s been great down there. For our young guys to watch somebody like that, who loves the game, great teammate and obviously he’s been terrific on the floor; I have a lot of respect for what he’s doing.” The Knicks will be eligible to sign a veteran free agent like Warren on March 1 because the pro-rated veteran’s minimum will fit under the second apron. New York’s team salary is capped at the second apron ($188.9 million).”
Bench scoring Please …….. !!!!
TJ has sat out a long time. He’s had plenty of time to heal and get in game shape. And has to be hungry to prove himself in the playoffs. Glad to see Thibs is watching ……
Seems clear he’ll be signing the day he’s eligible. We need exactly someone with his profile, a scoring combo forward. I think he’ll get real minutes for us down the stretch.
Where does the other half of the tax penalties go?
It’s vaguely described as being used for “league purposes.”
From Larry Coon’s CBA FAQ:
“League purposes” essentially means for any purpose the league decides, including distributing the money back to teams. Currently 50% of the tax revenue is used as a funding source for the revenue sharing program, and the remaining 50% is distributed to non-taxpaying teams in equal shares.
Should Clippers be removed from the last line since they are not paying tax this year?
They’d still be subject to repeater rates if they’re a taxpayer next season since they were in the tax in 2022, 2023, and 2024. They’d need to spend another season out of the tax to get back to the standard rates in 2027.