Hoops Rumors Glossary

Players and teams have to meet certain criteria to earn Bird rights and Early Bird rights, but Non-Bird rights are practically a given.

They apply to a player who has spent a single season or less with his team, as long as he finishes the season on an NBA roster and is on a standard contract (rather than a hardship or 10-day deal). Even a player who signs a rest-of-season contract right before the regular season finale and spends just a single day with his club would have Non-Bird rights in the offseason.

Teams can also claim Non-Bird rights on Early Bird free agents if they renounce them. The primary motivator to do so would be to allow the team to sign the free agent to a one-year contract, a move that’s not permitted via Early Bird rights.

Teams are eligible to sign their own free agents using the Non-Bird exception for a salary starting at 120% of the player’s previous salary, 120% of the minimum salary, or the amount of a qualifying offer (if the player is a restricted free agent), whichever is greatest. Contracts can be for up to four years, with 5% annual raises.

The cap hold for a Non-Bird player is 120% of his previous salary, unless his previous salary was the minimum. In that case, the cap hold is equivalent to the two-year veteran’s minimum salary. If a Non-Bird free agent only has one year of NBA experience, his cap hold is equivalent to the one-year veteran’s minimum salary.

The salary limitations that apply to Non-Bird rights are more severe than those pertaining to Bird rights or Early Bird rights, so in many cases, the Non-Bird exception may not be enough to retain a well-regarded free agent. For instance, the Bucks held Malik Beasley‘s Non-Bird rights last summer, but couldn’t have used them to match or exceed the offer the veteran wing received from the Pistons.

Because Beasley was on a minimum-salary contract in 2023/24, Milwaukee’s ability to offer a raise using the Non-Bird exception was extremely limited — the Bucks would have only been able to offer 120% of Beasley’s minimum salary using his Non-Bird rights, which worked out to $3,586,260. Detroit used its cap room to give Beasley a one-year, $6MM contract, easily topping Milwaukee’s maximum offer.

The Sixers may end up in a similar situation this offseason with Guerschon Yabusele, who will only have Non-Bird rights after playing out a one-year, minimum-salary contract. Philadelphia will only be able to offer him up to 120% of his 2025/26 minimum salary using the Non-Bird exception. That would work out to a projected $2.85MM.

Given how well Yabusele has performed this season, that likely won’t be enough to retain them, meaning the cap-strapped Sixers could have trouble making a competitive offer for the big man unless they can free up some mid-level exception money.

Holding Non-Bird rights on a free agent didn’t help the Bucks with Beasley and might not be enough for the Sixers with Yabusele, but there are cases in which the exception proves useful.

The Celtics, for instance, only had Non-Bird rights on Neemias Queta last offseason, but that gave them the ability to offer him a three-year contract, exceeding the one- or two-year minimum-salary offer they could have made if he were an outside free agent. Non-Bird rights also came in handy for a series of players involved in sign-and-trades, including Cody Zeller (Pelicans to Hawks), Charlie Brown Jr. (Knicks to Hornets), and Shake Milton (Knicks to Nets).

The higher a player’s previous salary is, the less restrictive his Non-Bird rights are. For example, after signing with the Spurs last summer, Chris Paul will only have Non-Bird rights this summer, but San Antonio would have significantly more flexibility than Denver will with Westbrook, since Paul is earning a $10.46MM base salary this season. The Spurs could offer Paul a starting salary of up to $12.55MM (120% of $10.46MM) using the Non-Bird exception.

Finally, it’s worth noting that a player who re-signs with his previous team on a one-year deal (or a two-year deal that includes a second-year option) and will have Early Bird or Bird rights at the end of that contract would surrender those rights if he consents to a trade. In that scenario, he’d only finish the season with Non-Bird rights. No players in that position this year consented to a trade.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron.

Bird rights offer teams the chance to sign their own free agents without regard to the salary cap, but they don’t apply to every player. Other salary cap exceptions are available for teams to keep players who don’t qualify for Bird rights. One such exception is the Early Bird, which applies to players formally known as Early Qualifying Veteran Free Agents.

While the Bird exception is for players who have spent three seasons with one club without changing teams as a free agent, Early Bird rights are earned after just two such seasons. Virtually all of the same rules that apply to Bird rights apply to Early Bird rights, with the requirements condensed to two years rather than three.

Players still see their Bird clocks restart by changing teams via free agency, being claimed in an expansion draft, or having their rights renounced. A player who is traded can also have his Bird clock reset if he approves a move after having re-signed with his previous team on a one-year contract (or a one-year contract with a second-year option) earlier in the league year.

As is the case with Bird rights, a player’s clock stops when he’s released by a team and clears waivers, but it would pick up where it left off if he re-signs with that same team down the road without joining another club in the interim.

For instance, if the Lakers were to re-sign Christian Wood this week, he would have Early Bird rights this offseason because – even though he was waived in February – he would be on track to finish a second consecutive season with Los Angeles and didn’t join another team in the interim.

Conversely, Lamar Stevens is an example of a player who won’t have Early Bird rights this offseason even though he’s finishing a second consecutive season with the Grizzlies. Stevens signed a contract with the Pistons between his stints in Memphis, resetting his Bird clock.

The crucial difference between Bird rights and Early Bird rights involves the limitations on contract offers. Bird players can receive maximum-salary deals for up to five years, whereas the most a team can offer an Early Bird free agent without using cap space is 175% of his previous salary (up to the max) or 105% of the league-average salary in the previous season, whichever is greater.

These offers are also capped at four years rather than five, and the new contracts must run for at least two years — the second season can be non-guaranteed, but can’t be a team or player option. Raises are maxed out at 8% per season.

Ty Jerome (Cavaliers) and Bruce Brown (Pelicans) are among the notable free agents who will have Early Bird rights during the 2025 offseason. Fred VanVleet (team option; Rockets) and Kelly Oubre (player option; Sixers) would join that group if their options are declined.

In some instances, teams can benefit from having Early Bird rights instead of full Bird rights if they’re trying to preserve cap space. The cap hold for an Early Bird player is 130% of his previous salary, significantly less than most Bird players, whose cap holds range from 150-300% of their previous salaries.

However, having a player’s Early Bird rights instead of his full Bird rights puts a team at a disadvantage in other cases. For example, when Isaiah Hartenstein reached free agency in 2024, his Early Bird rights limited the Knicks to a maximum four-year offer of $64.2MM ($72.5MM after incentives), a figure the Thunder had no problem topping when they signed Hartenstein to a three-year, $87MM deal.

In order to match or exceed Oklahoma City’s offer, New York would have had to use cap room, which the team didn’t have available — having Hartenstein’s full Bird rights would’ve allowed the Knicks to give him a far more substantial contract without requiring cap space.

Meanwhile, some players with limited NBA experience are subject to a special wrinkle involving Early Bird rights, called the Gilbert Arenas provision, which applies to players who have only been in the league for one or two years. We cover the Arenas provision in a separate glossary entry, so you can read up on the details there.

Essentially, the Arenas provision protects teams from a situation like the ones the Knicks found themselves in with Hartenstein, allowing them to match offer sheets on their restricted free agents without necessarily using Bird rights or cap room to do so.

During the 2023 offseason, Lakers guard Austin Reaves and Pelicans forward Herbert Jones were both Arenas free agents. Another Laker, Max Christie, and Pistons forward Simone Fontecchio were among the RFAs who fit the bill a year ago. There are no notable restricted free agents in 2025 on track to be subject to the Arenas provision, though there might be a small handful who fall into that category if they receive qualifying offers after having team options declined.

Finally, one more distinction between Bird rights and Early Bird rights applies to waivers. Players who are claimed off waivers retain their Early Bird rights, just as they would if they were traded. Those who had full Bird rights instead see those reduced to Early Bird rights if they’re claimed off waivers.

This rule stems from a 2012 settlement between the league and the union in which J.J. Hickson was given a special exception and retained his full Bird rights for the summer of 2012 even though he had been claimed off waivers that March.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron.

The Bird exception, named after Larry Bird, is a rule included in the NBA’s Collective Bargaining Agreement that allows teams to go over the salary cap to re-sign their own players. A player who qualifies for the Bird exception, formally referred to as a Qualifying Veteran Free Agent, is said to have “Bird rights.”

The most basic way for a player to earn Bird rights is to play for the same team for at least three seasons, either on a long-term deal or on separate one- or two-year contracts. Still, there are other criteria. A player retains his Bird rights in the following scenarios:

1. He changes teams via trade.

For instance, the Hawks will hold Caris LeVert‘s Bird rights when he reaches free agency this offseason, despite just acquiring him in February. His Bird clock didn’t reset when he was traded from Cleveland to Atlanta.

2. He finishes a third season with a team after having only signed for a partial season with the club in the first year.

The Cavaliers signed Sam Merrill during the second half of the 2022/23 season, adding him to their roster in March 2023. When his contract expires this offseason, Merrill will have Bird rights despite not spending three full seasons with Cleveland, because that partial season in ’22/23 started his Bird clock.

3. He signs a full-season contract (ie. not a 10-day deal), his team waives him, and he cleared waivers. He subsequently re-signs with the club (without joining another team in the interim) and ultimately remains under contract through a third season.

This one’s a little confusing, but let’s use former Lakers big man Christian Wood as an example. After spending the 2023/24 season with Los Angeles and opening the ’24/25 season on the roster, Wood was waived by the team in February.

If the Lakers were to re-sign Wood in July without him joining a new team in the interim, his Bird clock would pick up where it left off. He’d have full Bird rights in the summer of 2026, since he would’ve spent part or all of each of the previous three seasons with the Lakers without changing teams in between.

Although the Lakers could restart Wood’s Bird clock by re-signing him, they wouldn’t be able to use any form of Bird rights to add him to their roster this offseason — they would have to use cap room or another exception to do so. His Bird clock would only resume once he’s back under contract.

This rule also applies to players who are waived after they already have Bird rights. For example, let’s say the Heat were to waive Duncan Robinson this offseason before his $19.9MM salary for 2025/6 becomes guaranteed.

Miami, which doesn’t project to have cap room this summer, would have no means to re-sign Robinson except via the minimum salary exception or perhaps the mid-level exception, since waiving him would mean losing his Bird rights. But if they did find a way to re-add him on a one-year contract after waiving him, the Heat would regain Robinson’s full Bird rights in 2026.

A player sees the clock on his Bird rights reset to zero in the following scenarios:

1. He changes teams via free agency.
2. He is waived and is not claimed on waivers (except as in scenario No. 3 above).
3. His rights are renounced by his team. However, as in scenario No. 3 above, a player’s Bird clock picks up where it left off if he re-signs with the club that renounced them without having signed with another NBA team. For example, Kelly Oubre had Non-Bird rights last offseason, then had those rights renounced by the Sixers as they freed up extra cap room. Since Oubre eventually signed a new deal with Philadelphia, his Bird clock picked up where it left off — if he picks up his 2025/26 player option, he would have full Bird rights during the 2026 offseason.
4. He is selected in an expansion draft.

Players on two-way contracts accumulate Bird rights in the same way that players on standard contracts do. Jazz center Micah Potter has been under contract with Orlando on two-way deals in each of the past three seasons, so if he remains on his current two-way deal through the end of 2024/25, he’ll have full Bird rights this summer.

If a player who would have been in line for Bird rights at the end of the season is waived and claimed off waivers, he would retain only Early Bird rights.

It’s also worth noting that there’s one specific scenario in which a player with Bird rights can lose them in a trade. A player who re-signs with his previous team on a one-year contract (or a one-year deal with a second-year option) would have his Bird clock reset if he’s traded later that season. As such, he receives the ability to veto trades so he can avoid that scenario.

[RELATED: Players who had the ability to veto trades in 2024/25]

The Bird exception was designed to allow teams to keep their best players, even when those teams don’t have the cap room necessary to do so.

When a player earns Bird rights, he’s eligible to re-sign with his team for up to five years and for any price up to his maximum salary (with 8% annual raises) when he becomes a free agent, no matter how much cap space the team has — or doesn’t have.

The maximum salary varies from player to player depending on how long he has been in the league, but regardless of the precise amount, a team can exceed the salary cap to re-sign a player with Bird rights.

A team with a Bird free agent is assigned a “free agent amount” – also called a cap hold – worth either 190% of his previous salary (for a player with a salary below the league average) or 150% of his previous salary (for an above-average salary), up to the maximum salary amount.

For players coming off rookie scale contracts, the amounts of those cap holds are 300% and 250%, respectively. The Bulls, for instance, will have a cap hold worth $25,057,101 for Josh Giddey on their books this offseason — 300% of his $8,352,367 salary for 2024/25.

Chicago could renounce Giddey and generate an extra $25MM+ in cap flexibility, but doing so would cost the Bulls the ability to re-sign him using Bird rights, which would force them to use either cap room or a different cap exception to re-sign him. As such, we can probably count on Chicago keeping Giddey’s cap hold on the books until his free agency is resolved.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron.

If an NBA team’s salary continues to rise after it surpasses both the salary cap and the luxury tax line, it may reach or exceed one or both tax “aprons.” The level of the first tax apron is several million dollars above the threshold at which a team becomes a taxpayer, while the second tax apron is another $10MM+ beyond the first apron.

A team whose salary exceeds the first apron is prohibited from making certain moves during that league year, while a team whose salary goes beyond the second apron faces even more restrictions. The goal is to encourage competitive balance by limiting the ability of the teams with the NBA’s highest payrolls to further upgrade their rosters.

Although the tax apron isn’t a new addition to the NBA’s Collective Bargaining Agreement, the 2023 CBA represents the first time that the league’s cap system features multiple aprons. The 2023 CBA also introduced several new rules that apply to teams whose salaries are above one or both aprons.

Let’s dive in and break down the tax aprons in greater detail…

How are the tax aprons calculated?

The formula that determined the level of the first tax apron in 2024/25 was as follows:

• Formula: $172,345,814 x ($140,588,000 / $136,021,000)
• Result: $178,132,000
  • Note: The result was rounded to the nearest thousand.

These may just look on the surface like a collection of random numbers, but there’s a method to the madness. $172,345,814 was the result of last season’s first apron calculation (it was rounded to the nearest thousand, $172,346,000, for functional purposes); $140,588,000 is this season’s salary cap; and $136,021,000 was last season’s cap.

In other words, the first apron is simply rising by the same rate as the salary cap. That will continue to be the case going forward.

Like the first apron, the second apron will increase at the same rate as the cap each season, meaning the formula for 2024/25 was as follows:

• Formula: $182,793,814 x ($140,588,000 / $136,021,000)
• Result: $188,931,000
  • Note: The result was rounded to the nearest thousand.

In future seasons, the current-year salary cap amount will be substituted into these two formulas in place of $140,588,000 to determine that season’s first and second tax aprons.

What restrictions does a team face if its salary is above the first tax apron but below the second apron?

When implementing its new CBA in 2023, the NBA gradually phased in the restrictions facing teams operating above the tax aprons over the course of two seasons. That gave those teams an opportunity to adjust their rosters to account for the new apron-related rules.

As of the 2024/24 season, all of the new restrictions are in effect.

Here are the moves that a team whose salary is above the first tax apron – but below the second apron – is prohibited from making in 2024/25 and beyond:

1. Acquiring a player via sign-and-trade.
2. Using any portion of the bi-annual exception for any transaction.
3. Using any portion of the non-taxpayer mid-level exception to acquire a player via trade or waiver claim.
4. Using more than the taxpayer portion of the mid-level exception to sign a player.
5. Signing a player who was waived during the current season if his pre-waiver salary for that season exceeded the amount of the non-taxpayer mid-level exception.
6. Using one or more outgoing players in a trade for matching purposes to take back more than 100% of the outgoing salary.
7. Using a traded player exception generated during the prior year (ie. between the end of the previous regular season and the end of the most recent regular season).

It’s worth clarifying a few points related to these restrictions.

A team operating above the first apron doesn’t have access to the bi-annual exception or non-taxpayer mid-level exception, both of which can be used to sign a player or to acquire a player via trade or waiver claim. First-apron teams can use the taxpayer mid-level exception, but it can only be used to sign a player, not to acquire one via trade or waiver claim.

A team restricted to the taxpayer form of the mid-level can’t exceed its limits in dollars or years. For instance, in 2024/25, the taxpayer mid-level exception can be used to sign a player to a deal with a starting salary of up to $5,168,000 for up to two years. That means a team using its mid-level exception to sign a player to a three-year contract worth $3MM annually would have to use the non-taxpayer MLE to do so, since the deal would only fit within the taxpayer MLE in terms of money, not years.

The fifth item in the list above is important to remember after the trade deadline when certain veterans negotiate contract buyouts. If the player’s salary exceeds the full value of the non-taxpayer mid-level exception ($12,822,000 in 2024/25), he would be ineligible to sign with a team operating above the first apron once he clears waivers and reaches free agency — even if he negotiates a buyout that reduces his salary to below that non-taxpayer MLE amount.

The sixth item in the list only applies in instances where salary-matching is necessary. For example, a team operating above the first tax apron could send out a player earning $10MM in exchange for a player earning $9.5MM and a second player on a one-year, minimum-salary contract — even though the club would technically be taking back more total salary than it’s sending out, the minimum-salary player can be acquired using the minimum salary exception, so the $10MM player is only being used to match the $9.5MM player’s incoming salary.

In regard to the seventh item, let’s say a team operating above the first apron currently has one traded player exception worth $5MM, then generates another one worth $8MM at the 2025 trade deadline. Both of those exceptions would become unavailable once the team’s 2025 offseason begins.

That club could subsequently make a draft-night deal that generates a new $7MM trade exception and use it at any point between its creation and the end of the 2025/26 regular season. But if that team continues operating above the first apron, that $7MM TPE would once again become unavailable once the 2026 offseason begins, prior to its typical one-year expiration date.

What restrictions does a team face if its salary is above the second tax apron?

A team whose salary is above the second tax apron is prohibited from making any of the moves unavailable to teams above the first apron, as described above. That includes acquiring a player via sign-and-trade, using any portion of the bi-annual exception, and so on.

Additional restrictions also apply to teams operating above the second apron. Here are the moves that teams above the second tax apron are prohibited from making in 2024/25 and beyond:

1. Using any portion of the mid-level exception.
2. Aggregating two or more player salaries in a trade.
3. Sending out cash as part of a trade.
4. Acquiring a player via trade by using a signed-and-traded player for salary-matching purposes.
5. Acquiring a player via trade using a traded player exception if that TPE was generated by sending out a player via sign-and-trade.

Teams above the second tax apron will face one more draft-related restriction beginning in the 2025 offseason. If the team’s salary exceeds the second apron at the end of a season, its first-round pick in the draft seven years away will be “frozen” — in other words, that pick would not be tradable.

If the team’s salary exceeds the second apron in at least two of the following four seasons (three of five in total), the frozen pick would move to the end of the first round for that draft. Conversely, if the team stays below the second apron for at least three of the subsequent four seasons, its pick becomes “unfrozen” and is once again tradable.

Let’s use the Suns as an example, since they’re a lock to finish the 2024/25 league year above the second tax apron. That would result in their 2032 first-round pick becoming frozen, ineligible to be traded once the ’25/26 league year begins. If their team salary remains above the second apron for at least two more seasons between ’25/26 and ’28/29, their frozen pick would move to the end of the 2032 first round and would remain ineligible to be dealt.

If multiple teams have a frozen pick moved to the end of the first round in a particular draft, they would make their selections in reverse order of their place in the NBA standings in the season prior to that draft. For example, if both the Suns and Celtics have their 2032 first-rounders moved to the end of the round and Boston finishes ahead of Phoenix in 2031/32, the Suns would pick ahead of the Celtics in that draft.

Can a team that begins a league year above the first or second tax apron gain the ability to make additional moves by reducing its salary and dipping below the apron(s)?

Yes. If a club were to open the 2025/26 league year carrying $200MM in salary, then engaged in a series of salary-dump trades that reduce its team salary to $150MM, it would no longer be subject to the restrictions facing an apron team.

The apron restrictions that apply to a team are determined by its salary position upon the conclusion of a given transaction. That means that if a second-apron club agrees to a trade that will move its team salary below the second apron, it could aggregate salaries and/or send out cash as part of that deal.

However, as long as the team’s salary remains above the first or second apron – or if the team is completing a transaction would push its salary above one apron or the other – that team is subject to the rules that apply to that apron level.

Critically, it’s worth noting that once a club engages in a roster move that is prohibited for a team above the first or second apron, that club will be hard-capped for the rest of the season at that apron level.

In 2024/25, for instance, teams like the Kings and Hornets acquired players via sign-and-trade, the Warriors and Mavericks used the non-taxpayer mid-level exception, and the Thunder and Pelicans took back more than 100% of their outgoing salary in trades. As a result, those teams are a few of the many that are hard-capped at the first apron ($178,132,000) and aren’t permitted to surpass that salary level for the rest of ’24/25.

The Nuggets, Pacers, and Knicks are the three teams currently hard-capped at the second apron ($188,931,000) this season. Denver used the taxpayer mid-level exception, Indiana sent out cash in a trade, and New York aggregated salaries in a trade.

Finally, there’s one more important point related to apron level restrictions and hard caps: A team that engages in any of the trade-related transactions prohibited for first or second apron teams between the end of the regular season and the end of that league year on June 30 will not be permitted to exceed that apron level during the following season.

If, for example, a team sends out cash in a trade in June of 2025, that team won’t be allowed to exceed the second tax apron during the 2025/26 league year. The inverse is also true — a team whose 2025/26 salary projects to be over the second apron won’t be able to trade cash in June 2025.

This rule only applies to trade-related transactions because the ones related to free agency don’t come into effect between the end of the regular season and the start of the next league year.

Anything else I should know about the tax aprons?

It’s worth pointing out that a club with a number of incentive bonuses on its books may find itself operating above the first or second apron even if its base team salary doesn’t exceed those levels.

For the purposes of calculating a team’s salary, a player’s likely incentives are included in his cap hit, but his unlikely incentives aren’t (an incentive is considered likely to be earned if it was achieved last season and unlikely to be earned if it wasn’t). However, for the purposes of determining a team’s apron level, all those incentives are counted.

That means a team with a $175MM base salary and an additional $5MM in unlikely incentives in 2024/25 would be considered a first apron team and would be unable to make certain roster moves, since there’s a chance those incentives could be earned, pushing the club’s salary above $178,132,000.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement.

An earlier version of this post was published in 2023.

The term “tax variance” doesn’t technically show up in the NBA’s Collective Bargaining Agreement, but it’s used colloquially to refer to instances in which a team’s salary for the purposes of calculating its end-of-season luxury tax bill diverges from its standard salary relative to the cap.

This can occur for a number of reasons, including player suspensions, incentives being met (or not), and certain free agent signings. Here’s a breakdown of how each of those occurrences affect a team’s salary for tax purposes:

Suspensions

When a player is suspended by the NBA, he forfeits a percentage of his salary. That percentage ranges from as low as 1/174th for a standard one-game suspension to as high as 1/91.6th for a suspension related to a failure to render services.

In each instance, a team receives a tax variance credit for 50% of the player’s forfeited salary. That means that if a player loses $1MM as a result of a suspension, his team receives a tax variance credit worth $500K.

That amount doesn’t come off the player’s cap hit or the standard team salary, which remain the same for the rest of the season. But for the purposes of calculating a team’s tax bill at the end of the season, the club’s total taxed salary is reduced by $500K as a result of the suspension.

The tax variance credit doesn’t apply to a suspension imposed by the player’s team, since it could open the door for clubs to try to reduce their tax bills or duck the tax entirely by suspending their players.

A player still forfeits a portion of his salary when he’s suspended by his team (subject to appeal), but his team doesn’t generate any cap or tax savings.

For instance, when the Heat suspended Jimmy Butler for seven games, it cost him $2,355,798 (7/145ths of his $48,798,677 salary), but it didn’t change Miami’s cap or tax situation at all.

Unlikely incentives that are earned / Likely incentives that go unearned

When a player’s contract includes incentives, they’re considered either “likely” or “unlikely” to be earned. Likely incentives count toward a player’s cap hit for that season, while unlikely incentives don’t.

An incentive is deemed likely or unlikely based on whether or not the player and/or his team met the incentive criteria the previous season. So if a player’s contract calls for a bonus if his team wins the title, he’s considered “likely” to earn it if his team won the championship the year before — even if, in reality, his team isn’t literally likely to repeat.

Here’s a more detailed example. Let’s say a player has a $20MM annual base salary, plus a $1MM incentive if his team wins at least 40 games, another $1MM incentive if his team makes the playoffs, and a third $1MM incentive if he appears in at least 65 games.

If the player appeared in 70 games the prior season and his team finished 41-41, missing the playoffs, he would’ve earned two of those three $1MM bonuses. That means that for the subsequent season, his cap hit would be $22MM, with $2MM in likely incentives counting against the cap and $1MM in unlikely incentives not counting toward his cap charge.

That $22MM is the player’s cap hit for the rest of the season, but his team is subject to tax variance depending on whether or not he earns those incentives again. If the player appears in just 50 games and his team wins 35, missing the postseason, he’d miss out on all three bonuses and his team would receive a tax variance credit of $2MM for the two likely incentives he didn’t end up earning.

Conversely, if the player stays healthy, appears in 75 games, and leads his team to a 50-win season and a playoff berth, he’d earn all of his incentives, including the $1MM that had been considered unlikely. That tax variance would be taken into account for the team, with $1MM being added to its salary for the purposes of calculating its tax bill.

If we assume our hypothetical team entered the season with its player counting toward the cap for $22MM and its total salary at $180MM, tax variance could result in that total ending up as low as $178MM or as high as $181MM by the end of the season, which could significantly change the team’s final tax payment.

Signings of free agents with fewer than two years of NBA service

A rookie’s minimum salary is significantly less than that of a veteran player. But a team looking to duck the tax while filling out its back-end roster spots can’t simply sign a handful of rookie free agents to maximize its savings.

When a player with fewer than two years of NBA service signs a free agent contract worth less than a two-year veteran’s minimum salary, tax variance applies — for tax purposes, that player counts for the same amount that a two-year veteran on a minimum deal would.

The rookie minimum salary for 2024/25 is $1,157,153, whereas the minimum for a two-year veteran is $2,087,519. If a team signed a rookie free agent to a minimum-salary contract this season, that player’s salary and cap hit would be just $1,157,153, but he would count for $2,087,519 toward the tax.

If that player signed a two-year, minimum-salary contract, his salary and cap hit in 2025/26 would be $1,955,377, but he’d count for $2,191,897 toward the tax (those figures can be found in the second column of our minimum-salary chart).

Because this tax variance only applies to free agents, teams can avoid it by signing a rookie draft pick to a minimum-salary contract. That’s why we often see taxpaying clubs prioritize second-round picks — they can use those selections to draft a player who will sign a rookie minimum contract and actually have that modest rookie-minimum figure count for tax purposes. Tyler Smith of the Bucks and Oso Ighodaro of the Suns are a couple 2024 second-rounders on second-apron teams who fall into this category.

It’s worth noting that the same rule applies when a team is converting a player to a standard contract from a two-way deal. If the player was initially signed as a draft pick, tax variance won’t apply to him. If he signed as a free agent, it will.

This is why the Knicks, when they were looking to remain below their hard cap while filling out their roster back in the fall, had the option to convert Ariel Hukporti or Kevin McCullar (both 2024 second-rounders) from two-way deals to rookie-minimum contracts to stay below the hard cap, but couldn’t do so with Jacob Toppin, who signed initially as a free agent. Tax variance would’ve applied to Toppin, who would’ve counted for tax (and apron) purposes as if he were a veteran free agent, even though he only had one year of NBA service on his résumé.

New York ultimately converted Hukporti, whose prorated minimum deal is worth just $1,064,049 for cap, tax, and apron purposes.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Information from ESPN’s Bobby Marks was used in the creation of this post.

The NBA’s salary cap is a “soft” cap, which is why most teams’ salaries have surpassed the $140,588,000 threshold for the 2024/25 season. Once a team uses up all of its cap room, it can use a series of “exceptions” – including the mid-level, bi-annual, and various forms of Bird rights – to exceed the cap.

Since the NBA’s Collective Bargaining Agreement doesn’t feature a “hard” cap by default, teams can construct rosters that not only exceed the cap but also blow past the luxury tax line ($170,814,000 in ’24/25). While it would be nearly impossible in practical terms, there’s technically no rule restricting a club from having a team salary worth double or triple the salary cap.

However, there are certain scenarios in which a team can become hard-capped at one of two thresholds, known as the “tax aprons.” Those scenarios are as follows:

A team becomes hard-capped at the first tax apron if:

1. The team uses its bi-annual exception to sign a player or to acquire a player via trade or waiver claim.
2. The team uses more than the taxpayer portion of the mid-level exception to sign a player (or multiple players).
   • Note: In 2024/25, the taxpayer MLE is worth $5,168,000, compared to $12,822,000 for the full non-taxpayer MLE. The taxpayer MLE can be used to complete deals up to two years, while the non-taxpayer MLE can be used to complete deals up to four years.
     
3. The team uses any portion of its mid-level exception to acquire a player via trade or waiver claim.
4. The team acquires a player via sign-and-trade.
5. The team signs a player who was waived during the current regular season and whose pre-waiver salary exceeded the amount of the non-taxpayer mid-level exception for that season.
6. The team takes back more than 100% of the salary it sends out in a trade via salary-matching.
7. The team uses a traded player exception generated during the prior year (ie. between the end of the previous regular season and the end of the most recent regular season).

A team making any of those roster moves must ensure that its team salary is below the first tax apron when it finalizes the transaction and remains below the apron for the rest of the league year.

For the 2024/25 league year, the first apron is set at $178,132,000, which is $7,318,000 above the tax line. A team that completes one of the moves listed above can’t surpass that line under any circumstances.

A team becomes hard-capped at the second tax apron if:

1. The team uses any portion of the mid-level exception (up to the taxpayer amount) to sign a player.
2. The team aggregates two or more player salaries in a trade.
3. The team sends out cash as part of a trade.
4. The team sends out a player via sign-and-trade and either uses that player’s outgoing salary to take back a contract or uses the resulting traded player exception to acquire a player via trade or waiver claim.

For the 2024/25 league year, the second apron is set at $188,931,000, which is $18,117,000 above the tax line.

So far in ’24/25, a total of 15 teams have hard-capped themselves at the first tax apron by acquiring a player via sign-and-trade, using the non-taxpayer mid-level exception, using the bi-annual exception, taking back more than 100% of the outgoing salary in a trade, or using a traded player exception generated last season.

Three more teams have hard-capped themselves at the second apron by using the mid-level exception, aggregating player salaries, sending out cash in a trade, or taking back salary for a player sent out via sign-and-trade.

For many of those teams, the restriction is barely noticeable — they remain far below their hard cap and haven’t had to worry about whether a roster move might put them over it. However, a handful of clubs, including the Warriors, Mavericks, and Knicks, will have to be wary of that hard cap as they approach the trade deadline.

It’s worth noting that even if a team starts a new league year above the tax apron, that doesn’t mean they can’t become hard-capped at some point later in the season. For example, the Bucks are currently operating above the second apron, but if they were to shed significant salary in a trade and then aggregated salaries in a subsequent deal, a hard cap would be imposed and they’d be ineligible to surpass the $188.9MM second apron for the rest of the league year.

In other words, the hard cap applies from the moment a team completes one of the transactions listed above, but isn’t applied retroactively.

Typically, a team’s hard cap expires on June 30 when the current league year comes to an end, with the team getting a clean slate on July 1. However, under the current CBA, if a team engages in any of the trade-related transactions prohibited for first or second apron teams between the end of the regular season and June 30, the team will not be permitted to exceed that apron level during the following season.

If, for example, a team sends out cash in a trade in June of 2025, that team won’t be allowed to exceed the second tax apron during the 2025/26 league year. The inverse is also true — a team whose 2025/26 salary projects to be over the second apron won’t be able to trade cash in June.

This rule only applies to trade-related transactions because the ones related to free agency don’t come into effect between the end of the regular season and the start of the next league year.

We go into more detail in a separate story on the transactions that result in hard caps for NBA teams.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Previous versions of this post was published in 2020, 2021, and 2023.

An NBA team that want to re-sign a player before he reaches free agency can do so, but only at certain times and if his contract meets specific criteria.

Rookie scale extensions, which can be completed for former first-round picks between the third and fourth years of their rookie scale contracts, were the NBA’s most common form of extension in the past. But the league relaxed its criteria for veteran extensions in its 2017 Collective Bargaining Agreement and loosened them further in the 2023 CBA, resulting in a significant increase in those deals in recent years. They’ve now overtaken rookie scale extensions as the league’s most frequently signed extensions.

[RELATED: 2024/25 NBA Contract Extension Tracker]

A veteran extension is any contract extension that tacks additional years onto a contract that wasn’t a rookie scale deal. Even if the player is still on his first NBA contract, he can technically receive a “veteran” extension if he was initially signed as a second-round pick or an undrafted free agent rather than via the league’s rookie scale for first-rounders.

Here’s a full breakdown of how players become eligible to sign veteran extensions, and the limits that come along with them:

When can a player sign a veteran contract extension?

A team that wants to sign a player to a veteran extension wouldn’t be able to simply complete that extension one year after the initial contract was signed. The team must wait a specified period of time before the player becomes extension-eligible, as follows:

• If the player initially signed a three- or four-year contract: Second anniversary of signing date.
  • Note: The second anniversary date also applies if the player previously signed an extension that lengthened his contract to three or four total seasons.
• If the player initially signed a five- or six-year contract: Third anniversary of signing date.
  • Note: The third anniversary date also applies if the player previously signed an extension that lengthened his contract to five or six total seasons.
• If the player previously renegotiated his contract and increased his salary by more than 10%: Third anniversary of renegotiation date.

A contract that only covers one or two seasons is ineligible to be extended.

An extension-eligible player who is on an expiring contract can sign an extension at anytime between the start of the league year in July and the end of that league year on June 30. This rule also applies to a player who is in the final standard year of his contract, with a player or team option the following year, as long as that option is declined as part of the extension.

If an extension-eligible player still has more than one non-option year remaining on his contract, he can be extended between the start of the league year and the last day before the regular season tips off. He would be ineligible for an extension during the regular season and would regain his eligibility the following July.

It’s worth noting that an extension signed between October 2 and the start of the regular season is considered – for the purpose of determining its anniversary – to have been signed on October 1.

For example, having signed a four-year extension with the Nuggets on Oct. 21, a day before the 2024/25 regular season began, Aaron Gordon – who is now under contract for five total seasons – will become extension-eligible on Oct. 1, 2027, which is considered to be the three-year anniversary of his recently signed extension.

On the other hand, because he signed his most recent extension on Oct. 24, a couple days after the season tipped off, Timberwolves center Rudy Gobert – who is now under contract for four total seasons – will become eligible for his next extension on Oct. 24, 2026, the actual two-year anniversary of his latest deal.

How many years can a player receive on a veteran extension?

A veteran extension can be for up to five years, including the year(s) remaining on the previous contract. The current league year always counts as one of those five years, even if an extension is agreed to as late as June 30.

For instance, when Grayson Allen signed an extension in April with the Suns, he was in the final year of previous contract, which ran through 2023/24. He added four extra years via the extension, maxing out at five years overall. He wouldn’t be able to add a fifth year at that time even though the regular season was over, since the ’23/24 league year still counted toward the total.

If a player signs a “designated” veteran extension, he can receive up to six total years, as we cover in a separate glossary entry. Jaylen Brown got a super-max extension from the Celtics during the 2023 offseason, while his teammate Jayson Tatum was the only player to sign one in 2024.

How much money can a player receive on a veteran extension?

The first-year salary in a veteran extension can be worth up to 140% of the salary in the final year of the player’s previous contract or 140% of the NBA’s estimated average salary, whichever is greater. Annual raises are limited to 8% of the first-year extension salary.

When Jalen Brunson signed an extension with the Knicks during the 2024 offseason, he added four extra years to the one year and $24,960,001 remaining on his previous deal. Because his cap hit comfortably exceeds the league’s estimated average salary, Murray was eligible to earn up to 140% of his final-year salary in the first year of his extension. As such, his new contract begins in 2025/26 with a base salary of $34,944,001, with 8% annual raises from there.

In 2023/24, the NBA’s estimated average salary is $12,930,000, so a player earning less than that amount would be eligible to receive an extension worth up to 140% of that figure. That would work out to a starting salary of $18,102,000 and a four-year total of about $81MM. That’s the maximum deal that Thunder guard Alex Caruso is now eligible to sign.

A contract extension can’t exceed the maximum salary a player is eligible to earn, so there are some instances in which a player won’t be able to get a full 40% raise on a new extension.

For instance, Bam Adebayo‘s new three-year, maximum-salary extension with the Heat should technically award him up to a 40% raise on his $37,096,620 salary in 2025/26. However, that would work out to a $51,935,268 salary in 2026/27. Even if the salary cap increases by the maximum allowable 10% in each of the next two summers, Adebayo’s maximum allowable salary in ’26/27 would be $51,033,600 (30% of that’s season’s cap). So he won’t receive a full 40% raise on his new deal.

Because a player’s own personal maximum salary on an extension is always at least 5% of his salary in the previous season, there are scenarios in which a player could exceed the league-wide maximum salary.

That’s the case for Stephen Curry, who signed a one-year, $62,587,158 extension with the Warriors in August. That extension is for the 2026/27 season. Even if the cap increases by 10% in each of the next two years, the league-wide maximum for a player with 10-plus years of NBA experience in ’26/27 would be $59,539,200. However, Curry is allowed to exceed that figure because he’ll earn $59,606,817 in ’25/26 — his latest one-year extension represents a 5% raise.

Designated veteran extensions and renegotiated contracts have slightly different rules for salaries and raises than standard veteran extensions. You can read about those differences in our glossary entries on those subjects.

Can a player sign a veteran extension as part of a trade?

The NBA’s Collective Bargaining Agreement does allow for extend-and-trade transactions, but the rules governing them are more limiting than for standard veteran extensions.

A player eligible for an extension can sign one in conjunction with a trade, but he would be limited to four overall years and a starting salary worth 120% of the final-year salary on his previous deal (or 120% of the estimated average salary, for players earning below the average). Subsequent annual raises are limited to 5% as well.

A player who receives an extension that exceeds those extend-and-trade limits becomes ineligible to be traded for six months. Conversely, a player who is involved in a trade becomes ineligible to sign an extension for six months if the extension would exceed the extend-and-trade limits.

Gobert’s three-year extension with the Timberwolves is an example of a recent extension that didn’t exceed the extend-and-trade limits — he took a pay cut from $43,827,586 to $35MM in the first year of the extension and the deal lengthened his contract to four total years. Because that extension fell within the extend-and-trade parameters, Gobert could still technically be traded this season despite signing in October, though he almost certainly won’t be.

Conversely, since Adebayo’s new extension lengthens his total contract to five years and will feature raises exceeding 5%, he’s be ineligible to be traded until January 6, six months after he signed the deal.

Players who renegotiate their current-year salary as part of an extension can’t be traded for six months. This applies this season to Magic forward Jonathan Isaac, who becomes trade-eligible on January 6, and Jazz forward Lauri Markkanen, who won’t be trade-eligible during the regular season since he renegotiated his deal on August 7 — his trade restriction will lift on Feb. 7, one day after this season’s deadline.

An extension-eligible player can’t be extended-and-traded between the end of the season and June 30 if there’s a chance he could become a free agent that July. That rule applies to both veterans on expiring contracts and veterans with team or player options that have yet to be exercised.

What are the other rules related to veteran extensions?

There are many more minor rules and guidelines related to veteran extensions, including several involving bonuses and option years. A full breakdown can be found in Larry Coon’s CBA FAQ, but here are some of the notable ones most likely to come into play:

• A contract with an option can be extended if the player opts in or the team picks up the option.
• A contract with an option can also be extended if the option is declined, as long as the extension adds at least two new years to the deal. The only exception to this rule involves an early termination option — a contract with an ETO can’t be extended if the ETO is exercised, ending the contract early.
• A newly signed extension can contain a player or team option, but not an early termination option.
• If a contract contains incentive bonuses, a veteran extension must contain the same bonuses. The bonus amounts can be increased or decreased by up to 8%, but they must still be part of the deal. An extension also can’t contain bonuses that weren’t part of the original contract.
• If a contract includes an unearned trade bonus, it doesn’t necessarily have to be applied to the extension. If the team and player elect not to carry over the trade bonus to the extension and the player is dealt before the extension takes effect, the application of the bonus would ignore the extension.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s CBA FAQ was used in the creation of this post.

Previous versions of this post were published in 2019, 2022, and 2023.

Under past NBA Collective Bargaining Agreements, up until the 2016/17 season, a player’s full cap hit was used for salary-matching purposes in trades, whether or not his salary was guaranteed. If a player had an $10MM salary with a partial guarantee of $1MM, his outgoing salary in a trade was the same as it would have been for a player who had a fully guaranteed $10MM contract.

That’s no longer the case, however. Now, only the guaranteed portion of a player’s contract counts for outgoing salary purposes in a trade, limiting the appeal of non-guaranteed salaries as trade chips.

This detail is crucial for determining how much salary a team can acquire in a trade — unless a team is under the cap, the amount of salary it sends out in a trade dictates how much salary it can take back. The amount of salary an over-the-cap team can acquire in a trade ranges from 100% to 200% of its outgoing salary, depending on exactly how much salary the team is sending out and the team’s proximity to a tax apron.

Under the old system, it might have made sense for a cap-strapped club to trade a player with a guaranteed salary for a player earning an equivalent non-guaranteed salary — the cap-strapped club could then waive that newly-acquired player to cut costs. That’s no longer a viable strategy.

Complicating matters further is the fact that a team can’t simply circumvent the new rules by trading a player before a league year ends on June 30, then having his new team waive him once his new non-guaranteed cap hit goes into effect on July 1. After the end of the regular season, a player’s outgoing salary for trade purposes is the lesser of his current-year salary and the guaranteed portion of his salary for the following season.

Here’s a practical example: During the 2024 offseason, the Warriors explored trade scenarios involving Chris Paul, who made $30.8MM in 2023/24 and had a non-guaranteed $30MM salary for ’24/25. Because the ’23/24 season was over, Paul’s outgoing salary for matching purposes would have been $0, his guarantee for ’24/25, which was (far) less than his total 2023/24 salary.

Sending out Paul without guaranteeing any portion of his salary would have been impractical for the Warriors if they hoped to take any salary back themselves, but they did have the ability to partially or fully guarantee his cap hit in order to make the trade math work. For instance, if Golden State had guaranteed $20MM of Paul’s $30MM salary, $20MM would have become his new outgoing amount for matching purposes.

Finding a sweet spot in that scenario was still a challenge. For instance, it would have worked from the Warriors’ perspective to increase Paul’s partial guarantee to $15MM and use his outgoing salary to acquire a player with a $15MM guaranteed salary. But Golden State’s trade partner would have been sending out a $15MM player and having to account for Paul’s full $30MM incoming salary (not just his partial guarantee), so the math likely wouldn’t have worked for that team. Paul was ultimately waived prior to his guarantee deadline when the Warriors couldn’t find a legal deal they liked.

During the first half of a season, the math on non-guaranteed contracts is a little trickier, since the guaranteed portion of a player’s salary increases for each day he’s on the roster.

For example, Pistons big man Paul Reed is making $7,723,000 this season and that amount is non-guaranteed. However, November 30 (the date this article is being published) is the 40th day of the regular season, meaning Reed has already earned 40/174ths of his salary. That works out to $1,775,402, which is what Reed’s outgoing amount for matching purposes would be if he were traded today.

Reed’s outgoing amount will continue to increase every day until January 10, which is the NBA’s league-wide salary guarantee date. At that point, Reed’s $7,723,000 salary would become fully guaranteed and would be his outgoing amount in any trade for the rest of the regular season.

To paint a complete picture of exactly how these new rules work, let’s assume a free agent signed a two-year, $24MM contract during the summer of 2024. His cap hit in each year is $12MM, but the first season of the contract is partially guaranteed for $3MM, while the second year is fully non-guaranteed. Here’s how it would count, for trade purposes, as outgoing salary:

1. From the date of the signing until the one-quarter mark of the 2024/25 season:
   • $3MM
   • Note: Due to other CBA rules, the player wouldn’t become trade-eligible until at least December 15, 2024 anyway.
2. From the one-quarter mark of the 2024/25 regular season until all salaries become guaranteed on January 10, 2025:
   • A prorated amount of the salary based on the player’s earnings to date.
   • Note: The player would earn 1/174th of his $12MM salary per day; so 60 days into the season, his outgoing salary in a trade would be $4,137,931 (60/174ths of $12MM).
3. From January 10, 2025 until the 2025 trade deadline:
   • $12MM
4. From the day after the team’s 2024/25 season ends until the start of the 2025/26 regular season:
   • $0
5. From the start of the 2025/26 regular season until salaries become guaranteed on January 10, 2026:
   • A prorated amount of salary based on earnings to date.
   • Note: The player would once again earn 1/174th of his $12MM salary per day; so 10 days into the season, his outgoing salary in a trade would be $689,655 (10/174ths of $12MM).
     
6. From January 10, 2026 until the 2026 trade deadline:
   • $12MM

This change to the NBA’s trade rules hasn’t stopped teams from tacking on non-guaranteed years to the end of certain players’ contracts, since those non-guaranteed salaries still provide flexibility. However, we’re not seeing teams construct contracts with non-guaranteed cap hits solely for trade purposes like we occasionally used to.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

A previous version of this article was published in 2023.

After previously implementing a “player resting policy” in 2017 in an attempt to reduce instances of teams holding healthy players out of games – particularly nationally televised games and road contests – the NBA modified those rules ahead of the 2023/24 season, introducing a new set of guidelines known as the Player Participation Policy.

The stated aim of the policy is to promote player participation over the course of the NBA’s 82-game regular season. It specifically focuses on players considered “stars,” defined by the policy as players who have made an All-Star team or an All-NBA team in any of the three prior seasons (or during the current season, once the All-Star Game has passed).

Unless a team has an approved reason for a star player not participating in a game, that team will be considered in potential violation of the player participation policy in the following scenarios:

1. If a team rests a star player in a game that is nationally televised or in an in-season tournament (NBA Cup) game.
2. If a team rests more than one star in the same game.
3. If a team repeatedly rests a star in road games instead of home games (teams must maintain a balance between one-game absences occurring on the road or at home, with the preference being for rest days to occur in home games).
4. If a team shuts down a healthy star for an extended period of time (e.g. if a tanking team stops playing one if its star players down the stretch).
5. If a star who is being rested is not on the bench and visible to fans.

An automatic NBA investigation is triggered in the event that a star player who is not injured misses a nationally televised or NBA Cup game or if multiple non-injured star players miss the same game. An investigation is also triggered if a player, agent, or team representative – such as the general manager or head coach – makes a statement that contradicts the player’s listing on the injury report.

The league can also open an investigation at its own discretion in other instances. For example, if a star player is continually held out of road games instead of home games or begins to play a “materially reduced role,” the NBA could look into the matter.

A team found to have violated the player participation policy is subject to a fine. The amounts of those fines are as follows:

• First violation: $100K
• Second violation: $250K
• Subsequent violations: $1MM more than the previous penalty (ie. $1.25MM for the third violation, $2.25MM for the fourth violation, and so on)

If the star player has a legitimate reason for being held out of action, the team won’t be penalized for violating the player participation policy. Of course, injuries are the most common reason why players miss games, but there are other exceptions the NBA allows.

For instance, a team is permitted to hold a star player out of one game in each of its back-to-back sets due to age (for a player who is 35 or older as of opening night), career workload (for a player who has logged either 34,000+ career regular season and playoff minutes or appeared in 1,000 career regular season and playoff games), or injury history (evaluated by the league on a case-by-case basis).

If one of the two games in a back-to-back set is nationally televised or is an NBA Cup game, a player who receives league approval to sit out one end of the back-to-back must play in that one. If both games meet that criteria, or if neither game does, it doesn’t matter which one the player misses.

Additionally, if a team has two stars who have been approved to sit out one end of back-to-backs, they can’t both miss the same game — one star must appear in the first one, while the other plays in the second.

Under the player participation policy, the NBA allows a star player to be held out of a game for personal reasons, such as the birth of a child or a death in the family, or in “rare and unusual circumstances,” which must be approved by the league office. The league also affords teams some end-of-season leeway. For example, a star player could be rested for the final game of the regular season if his team has already clinched a specific playoff seed.

A team may be investigated for one possible violation of the NBA’s player participation policy and end up being fined for a different violation. That occurred when the league looked into the Sixers’ decision to sit Joel Embiid for a nationally televised game near the start of the 2024/25 season.

Although the team had insisted Embiid experienced no setbacks after suiting up for the Olympics, the NBA found the big man had a legitimate knee injury and fined Philadelphia $100K for inconsistent statements about Embiid’s health that misrepresented his condition.

The NBA advises teams to “err on the side of over-communicating” with the league office to ensure they’re complying with the player participation policy, which means contacting the league ahead of time to explain a star player’s potential absence instead of waiting until after the NBA launches an investigation.

The list of stars affected by the player participation policy during the 2024/25 season can be found right here.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Information from ESPN’s Bobby Marks was used to confirm details in this post.

NBA teams can become hard-capped during a given league year if they use specific cap exceptions or make certain transactions, but the league doesn’t have a hard cap in place for all its teams.

However, in addition to its soft cap, the league does have a luxury tax threshold, which serves to discourage excessive spending. When a team’s total salary is over that line at season’s end, the NBA charges a tax for every surplus dollar the club spends.

The luxury tax line is set each season at 121.5% of the salary cap threshold, rounded to the nearest thousand. In 2024/25, the league’s salary cap is set at $140,588,000, so the luxury tax threshold is $170,814,000. That means any team whose total ’24/25 salary exceeds $170,814,000 on the last day of the regular season is subject to a tax bill.

The NBA’s luxury tax system is set up so that the penalties become more punitive the further teams go beyond the tax line. Teams who are in the first tax bracket will pay a significantly less significant tax rate per dollar than teams operating in the third or fourth bracket (or beyond).

In 2023/24, the amount of each tax bracket was $5MM, which meant a team faced an increased tax rate once its total salary surpassed $5MM over the tax, $10MM over the tax, $15MM over the tax, and so on.

In 2024/25 and in subsequent seasons, the size of those tax brackets will increase at the same rate as the salary cap. For example, since the cap rose by about 3.36% from ’23/24 to ’24/25, the size of each tax bracket increased by 3.36% too, from $5MM to $5,168,000.

Here’s what the luxury penalties will look like in 2024/25:

For each additional $5,168,000 above the tax line beyond $25,840,000 a team operates, its tax rates increase by $0.50 per dollar of team salary. So, the penalty is $3.75 per dollar between $20,672,001 and $25,840,000, $4.25 per dollar between $25,840,001 and $31,008,000, and so on.

Here’s a practical example of how the tax penalties work. The Nuggets currently have a team salary of $182,574,315, which is above this season’s tax line by $11,760,315, putting them in the third tax bracket. Denver’s total salary will likely move up or down before the season is over, but the team’s current projected tax bill is $20,356,788. That’s based on a penalty of $7,752,000 from the first tax bracket, $9,044,000 from the second, and $3,560,788 from the third (a penalty of $2.50 per dollar on $1,424,315).

The rates listed above apply to most taxpayers, including 10 of the 14 teams currently in the tax for 2024/25: the Nuggets, Suns, Timberwolves, Celtics, Knicks, Heat, Sixers, Mavericks, Pelicans, and Cavaliers. However, a team can become subject to a more punitive “repeater” penalty if it paid the tax in at least three of the previous four seasons.

This scenario currently applies to four teams — the Warriors, Clippers, Bucks, and Lakers paid the tax at least three times from 2021 to 2024, which means they’ll be repeat offenders this season.

Here are the penalties that apply to repeat taxpayers in 2024/25:

As is the case with the standard penalties, the tax rate continues to increase by $0.50 per tax bracket, so a repeater taxpayer in the fifth bracket would face a tax rate of $4.75 per dollar; that would increase to $5.25 per dollar in the sixth tax bracket, and so on.

The Clippers are currently carrying $173,279,116 in total salary, surpassing the tax line by $2,465,116. Because they’re charged $2.50 per dollar as a repeater taxpayer, their projected tax bill is $6,162,790 instead of the standard rate of $3,697,674.

The further into tax territory a team goes, the greater the difference between the repeater rate and the standard rate becomes. For instance, the Bucks’ projected tax bill at the moment is $74,837,699. If they weren’t subject to repeater penalties, it would be just $52,554,394.

The 2024/25 season is the last one in which the rates outlined above will apply. Beginning in 2025/26, the NBA is adjusting the tax rates to make them even more punitive for repeater taxpayers and heavy spenders. Conversely, the penalties for standard taxpayers who finish the season in one of the first two tax brackets will be lowered.

Here are the changes coming next season:

These rates will continue to increase by $0.50 per tax bracket beyond the fourth bracket.

The goal of these tweaks is to discourage teams from soaring way beyond the luxury tax line without making the tax line itself a major deterrent.

Since luxury tax penalties are calculated by determining a team’s total cap hits at the end of its season, a team that starts the year above the tax line could get under it before the end of the season by completing trades or buyouts. The Pelicans did just that in 2023/24, moving out of tax territory by salary-dumping Kira Lewis‘ expiring contract in January.

New Orleans is one of just two NBA teams that has never been a taxpayer (Charlotte is the other) and is operating only narrowly above the tax line this season, so it wouldn’t be a surprise to see the team make another mid-season deal to duck the tax.

It’s also worth noting that team salary for tax purposes is calculated slightly differently than it is for cap purposes. Here are a few of the adjustments made at season’s end before a team’s tax bill is calculated:

• Cap holds and exceptions are ignored.
• “Likely” bonuses that weren’t earned are removed from team salary; “unlikely” bonuses that were earned are added to team salary.
  • Note: Bonuses based on playoff-related criteria can be removed or added to team salary after the regular season ends. In that scenario, a team’s tax bill is based on its salary at the end of the team’s season (ie. its playoff run), not the end of the regular season.
• If a player with a trade bonus is acquired after the final regular season game, that trade bonus is added to team salary.
• If a rookie or second-year player signed a minimum-salary free agent contract, the applicable minimum-salary cap charge for a two-year veteran is used in place of that player’s cap charge.
  • Note: This “tax variance” rule only applies to free agents, not drafted players.

So let’s say that five teams finish the season owing a total of $75MM in taxes. Where does that money go? Currently, the NBA splits it 50/50 — half of it is used for “league purposes,” while the other half is distributed to non-taxpaying teams in equal shares. In our hypothetical scenario, the 25 non-taxpaying teams would receive $2MM apiece.

As cap expert Larry Coon explains in his CBA FAQ, “league purposes” essentially covers any purpose the NBA deems appropriate, including giving the money back to teams. In recent years, the NBA has used that money as a funding source for its revenue sharing program.

Coon also notes that the CBA technically allows up to 50% of tax money to be distributed to non-taxpaying teams, but there’s no obligation for that to happen — in other words, the NBA could decide to use 100% of the tax money for “league purposes.”

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in previous years.