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{{Use dmy dates|date=September 2023}}
{{Short description|National Basketball Association payment cap}}
The '''NBA salary cap''' is the
The majority of American leagues (NFL, NHL, MLS) have hard caps while the NBA has a soft salary cap. Hard salary caps forbid teams from going above the salary cap. Soft salary caps allow teams to go above the salary cap, but will subject such teams to reduced privileges in [[Free agent|free agency]]. Teams that go above the [[luxury tax (sports)|luxury tax]] cap are subject to the luxury tax (a tax on every dollar spent over the luxury tax cap).
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The NBA had a [[salary cap]] in the mid-1940s, but it was abolished after only one season. The league continued to operate without such a cap until the [[1984–85 NBA season|1984–85]] season, when one was instituted in an attempt to level the playing field among all of the NBA's teams and ensure competitive balance for the League in the future. Before the cap was reinstated, teams could spend whatever amount of money they wanted on players, but in the first season under the new cap, they were each limited to $4.6 million in total payroll.<ref name=sprff>{{cite news |url=https://news.google.com/newspapers?id=qNURAAAAIBAJ&sjid=oO4DAAAAIBAJ&pg=7432%2C138704 |work=Spokesman-Review |location=(Spokane, Washington) |agency=Associated Press |title=Sonics' payroll one of five frozen |date=April 1, 1983 |page=25}}</ref>
Under the 2005 [[NBA collective bargaining agreement|CBA]], salaries were capped at 57 percent of basketball-related income (BRI) and lasted for six years until June 30, 2011.<ref>{{cite news |last=Broussard |first=Chris |author-link=Chris Broussard |date=October 7, 2011 |title=Sources: Meeting before deadline off |url=
To ensure the players get their share of the BRI, teams are required to spend 90 percent of the salary cap each year. The salary cap for the [[2022–23 NBA season|2022–23 season]] is $123.655 million (minimum team salary, which is set at 90 percent of the Salary Cap, is $111.290 million).<ref name="2022NBAcap">{{cite web|url=https://www.nba.com/news/nba-salary-cap-for-2022-23-season-set-at-just-over-123-million|title=NBA salary cap for 2022-23 season set at just over $123 million|date=30 June 2022|publisher=NBA|access-date=July 7, 2022}}</ref> The league's newest CBA, which takes effect with the 2023–24 season, requires teams to meet the 90% salary floor at the start of preseason training camp.<ref>{{cite web|url=https://sports.yahoo.com/2023-nba-draft-how-serious-are-teams-taking-the-new-cba-even-the-big-spending-warriors-are-shedding-salary-061459899.html |title=2023 NBA Draft: How serious are teams taking the new CBA? Even the big-spending Warriors are shedding salary |first=Jake |last=Fischer |website=Yahoo Sports |date=June 23, 2023 |access-date=June 28, 2023}}</ref>
In December 2016, the league and the players' union reached a tentative agreement on a new CBA, with both sides ratifying it by the end of that month.<ref>{{cite press release|url=http://www.nba.com/article/2016/12/23/nba-and-nbpa-ratify-new-collective-bargaining-agreement |title=NBA, players ratify new collective bargaining agreement |publisher=National Basketball Association |date=December 23, 2016 |access-date=January 15, 2017}}</ref> This agreement was set to run through the 2023–24 season, with either side able to opt out after the 2022–23 season.<ref name="Windhorst CBA">{{cite web |last=Windhorst |first=Brian |author-link=Brian Windhorst |date=December 20, 2016 |title=Answering your questions about the new collective bargaining agreement |url=https://www.espn.com/nba/story/_/id/18317693 |access-date=December 20, 2016 |work=ESPN}}</ref><ref name="Heat Hoops">{{cite web|url=http://heathoops.com/2016/12/nba-players-association-reach-agreement-on-new-cba/ |title=NBA,
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The luxury tax level for the [[2008–09 NBA season|2008–09]] season was $71.15 million.<ref name="nba.com"/> For the [[2009–10 NBA season|2009–10]] season, the luxury tax level was set at $69.92 million.<ref name="ReferenceA"/> The luxury tax level for the 2010–11 and 2012–13 NBA seasons was $70,307,000.<ref name=2012_13_cap>{{cite press release|title=NBA salary cap for 2012-13 season set at $58.044 million|publisher=National Basketball Association|date=July 10, 2012|url=http://www.nba.com/2012/news/07/10/nba-salary-cap-release/index.html?ls=iref:nbahpt2|archive-url=https://web.archive.org/web/20120714114551/http://www.nba.com/2012/news/07/10/nba-salary-cap-release/index.html?ls=iref:nbahpt2|archive-date=July 14, 2012|url-status=dead}}</ref>
The 2011 CBA instituted major changes to the luxury tax regime. The previous CBA had a dollar-for-dollar tax provision system, which remained in effect through the 2012–13 season. Teams exceeding the tax level were punished by being forced to pay one dollar to the league for each dollar by which their payroll exceeded the tax level. Starting in 2013–14, the tax changed to an incremental system. Under the current system, tax is assessed at different levels based on the amount that a team is over the luxury tax threshold.<ref>{{cite web|url=http://www.cbafaq.com/salarycap.htm#Q21|title=NBA Salary Cap FAQ|website=www.cbafaq.com|access-date=30 March 2018}}</ref> The scheme is not cumulative—each level of tax applies only to amounts over that level's threshold. For example, a team that is $8 million over the tax threshold will pay $1.50 for each of its first $5 million over the tax threshold, and $1.75 per dollar for the remaining $3 million. Starting in 2014–15, "repeat offenders", subject to additional penalties, are defined as teams that paid tax in previous seasons. In the first season, repeat offenders from in all previous three seasons paid a stiffer tax rate; from 2015 to 2016 thereafter, teams paying taxes in three out of four years are subject to the higher repeater rate.<ref name=cbafaq/> As in the previous CBA, the tax revenue is divided among teams with lower payrolls.<ref name="Bresnahan">{{cite news|url=
For the 2013–14 season, the luxury tax threshold was set at $71.748 million. The Brooklyn Nets, whose payroll for that season was projected to be over $100 million, would face a luxury tax bill above $80 million, resulting in a total payroll cost of $186 million.<ref>{{cite news|url=https://sports.yahoo.com/blogs/nba-ball-dont-lie/andrei-kirilenko-joins-brooklyn-nets-pay-186-million-001236302.html |title=Andrei Kirilenko joins the Brooklyn Nets, who will pay $186 million for their roster next season |first=Eric |last=Freeman |work=Ball Don't Lie |publisher=Yahoo! Sports |date=July 11, 2013 |access-date=July 16, 2013}}</ref>
=== Tax levels from
{| class="wikitable"
|-
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Once a year, teams can use a mid-level exception (MLE) to sign a player to a contract for a specified maximum amount. The amount of the MLE and its duration depend on the team's cap status. In the 2017 CBA, the MLE was initially set at $8.406 million in the 2017–18 season for teams that are over the cap either before or after the signing, but under the [[#Luxury tax|luxury tax]] apron, set at $6 million above the tax line. Teams can use this exception to offer contracts of up to four years. Teams above the apron have an MLE initially set at $5.192 million, allowing contracts of up to three years. Teams with cap room, which were ineligible for the MLE before the 2011 CBA, have an MLE initially set at $4.328 million that allows two-year contracts. In subsequent seasons, all MLE amounts will be determined by applying the percentage change of the salary cap to the previous exception amount.<ref name="Coon 2017 CBA exceptions">{{cite web|url=http://www.cbafaq.com/salarycap.htm#Q25 |title=25. What are salary cap exceptions? |first=Larry |last=Coon |work=NBA Salary Cap FAQ |access-date=July 9, 2017}}</ref>
Before the 2011 NBA, the MLE was equal to the average NBA salary for all teams over the cap; teams with cap room were then ineligible for the MLE.<ref name=coon_11282011/> The Mid-Level Exception for the 2008–09 NBA season was $5.585 million.<ref name="nba.com">{{cite web|url=http://www.nba.com/news/salarycapset_080709.html |title=NBA Salary Cap for 2008–9 Season |
Under the 2017 NBA, the apron was initially set at $6 million above the tax line for the 2017–18 season. In a new feature, the apron changes from season to season, with the percentage change (up or down) set at half of the rate of change of the cap for that season.<ref name="Heat Hoops"/>
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===Second-round pick exception===
The 2023 CBA created the second-round pick exception which allows teams to sign their second-round draft picks for up to four years without counting against the cap until July 31 of the player's first season.<ref>{{cite web |last=Adams |first=Luke |title=Hoops Rumors Glossary: Second-Round Pick Exception |date=4 July 2023 |url=https://www.hoopsrumors.com/2023/07/hoops-rumors-glossary-second-round-pick-exception.html}}</ref>
The first second-round pick exception was executed by the Sacramento Kings when they signed No. 34 overall pick Colby Jones. <ref>{{cite web |url=https://www.forbes.com/sites/bryantoporek/2023/08/01/why-nba-teams-are-valuing-draft-picks-more-than-ever-before|website=www.forbes.com|access-date=2023-09-21|title=Why NBA Teams Are Valuing Draft Picks More Than Ever Before}}</ref>
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===Rookie scale salary=== <!-- linked from "Rookie exception" section-->
First-round draft choices are assigned salaries according to their draft position. The first overall pick receives more than the second pick, the second more than the third, and so on. Each contract is for two years, with a team option for the third and fourth seasons (CBAs before 2011 provided for three-year contracts with an option for the fourth season), with built-in raises every year to compensate for increases in the average salary. A team may elect to exceed rookie scale for a drafted player that was unsigned for which they retained his draft rights three seasons after the draft. The contract would be for at least three seasons, with a maximum value up to the team's available cap room.<ref>{{cite news|title=Splitter: The Difference|date=April 23, 2009|work=ESPN|url=
In 2017, the scale for lottery picks was as follows:
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[[Image:Derrick Rose 02.jpg|thumb|left|In a rule named after [[Derrick Rose]], accomplished players coming off their rookie contract could earn more money in the 2011 CBA.]]
A Designated Player coming off his rookie contract may be eligible to earn 30% of the salary cap (rather than the standard 25%) if he attains certain criteria. Through the 2017–18 season, in order to be eligible, the player must be voted to start in two [[NBA All-Star Game|All-Star Games]], or be named to an [[All-NBA Team]] twice (at any level), or be named [[NBA Most Valuable Player Award|MVP]]. Officially titled the "5th Year 30% Max Criteria",<ref name=":1">Coon, Larry (2012); "[http://www.cbafaq.com/salarycap.htm#Q58 NBA Salary Cap/Collective Bargaining Agreement FAQ 58: Rookie scale contract extensions]." Accessed July 27, 2013.</ref> it has been dubbed (and is more commonly known as) the "[[Derrick Rose]] Rule" after the 2011 MVP,<ref>{{cite news |title=Derrick Rose eager for the season to start |date=November 29, 2011 |work=ESPNChicago.com |publisher=ESPN Internet Ventures |url=
The 2017 CBA changed the qualification criteria for "5th Year, 30% Max" contracts. Players who come off rookie contracts at the end of the 2017–18 season, or later, must meet any of the following criteria to qualify:<ref>{{cite web|url=http://3c90sm37lsaecdwtr32v9qof.wpengine.netdna-cdn.com/wp-content/uploads/2016/02/2017-NBA-NBPA-Collective-Bargaining-Agreement.pdf |title=Article II, Section 7(a)(i)(B): Maximum Annual Salary |work=2017 NBA Collective Bargaining Agreement |page=36 |publisher=[[National Basketball Players Association]] |access-date=April 6, 2017}}</ref>
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* [[Kyrie Irving]] (Boston Celtics) until 2020
*[[Damian Lillard]] (Portland Trail Blazers) until 2021
[[Kevin Love]] was eligible for a designated player contract, but the Minnesota Timberwolves opted<ref>Wojnarowski, Adrian. [https://sports.yahoo.com/news/nba--kevin-love-remains-unsure-about-timberwolves--future-200009299.html "Kevin Love unsure about Timberwolves' future"] Yahoo.com. Accessed September 30, 2013</ref> for a 4-year contract (with a player option year included, potentially allowing him to become an unrestricted free agent) instead.<ref>{{cite news |
===="Supermax" Rule====
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The first player to sign a supermax contract was Stephen Curry, who agreed to a new five-year DVPE deal with the Warriors, worth $201 million, that runs through the 2021–22 season. Curry signed the contract once the NBA's free agency moratorium ended on July 6, 2017.<ref>{{cite news |last=Wojnarowski |first=Adrian |date=July 1, 2017 |title=Stephen Curry's supermax deal becomes richest in NBA history |url=https://www.espn.com/nba/story/_/id/19779626 |access-date=July 2, 2017 |work=ESPN.com}}</ref>
Shortly thereafter, James Harden agreed on a DVPE with the Rockets. At the time of signing, his current contract had two years remaining with total pay of $59 million; the extension added another $170 million over four seasons, ending in 2022–23.<ref>{{cite news |
The next supermax signing was that of John Wall, who agreed later in July to a four-year, $170 million extension that began in 2019–20.<ref>{{cite news |date=July 22, 2017 |title=John Wall agrees to four-year, $170M extension with Wizards, source says |url=https://www.espn.com/nba/story/_/id/20126796 |access-date=July 24, 2017 |work=ESPN.com}}</ref> In late September, Russell Westbrook became the fourth and final supermax signing of the 2017 offseason, signing a five-year, $205 million extension that started in 2018–19.<ref>{{cite news |last=Wojnarowski |first=Adrian |date=September 29, 2017 |title=Russell Westbrook signs 5-year, $205M extension with Thunder |url=https://www.espn.com/nba/story/_/id/20862559 |access-date=September 30, 2017}}</ref>
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The 2017 CBA changed the accounting rules for the player's original team in this scenario. If the original team matches, and has enough cap space to absorb the average annual salary of the offer, it can choose to take cap hits of either the actual contract payouts or the average of the contract in each season.<ref name="Heat Hoops"/>
Before the 2005 CBA, the original team could only use an exception to re-sign a player who had been drafted in the first round. The 2005 CBA allowed teams to use exceptions on non-first-round picks, with the extension named the "Gilbert Arenas Rule". In 2003, [[Gilbert Arenas]], who had been a second-round pick in [[2001 NBA draft|2001]], signed a six-year, $60 million contract with the [[Washington Wizards]] after his original team, the [[Golden State Warriors]], were unable to match the offer since they were over the salary cap.<ref>{{cite news |last=Hu |first=Janny |title=Final looks in store for Warrick, Granger |date=June 23, 2005 |newspaper=San Francisco Chronicle |page=D-3 |url=http://www.sfgate.com/cgi-bin/article.cgi?f=/chronicle/archive/2005/06/23/SPG47DDGAC1.DTL |archive-url=https://
===July moratorium===
Players on a team's season-ending roster remain under contract with their respective team until the start of the new league year on July 1.<ref>{{cite news|title=Hawks letter names Paul, Howard|date=June 5, 2013|work=ESPN|url=
*[[#Rookie scale salary|Rookie scale contracts]] to first-round draft picks.
*A second-round draft pick can accept a required tender, which is a one-year contract that teams are required to offer in order to retain their rights to the player.
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*Teams may sign players to two-way contracts, convert a two-way contract to a standard NBA contract, or convert a standard NBA contract with an Exhibit 10 bonus to a two-way contract<ref name=cbafaq/>
During the moratorium, teams are restricted from commenting on deals.<ref>{{cite news|last=Beck|first=Howard|title=With Eye on Williams, Nets to Acquire Johnson|date=July 2, 2012|newspaper=The New York Times|url=https://www.nytimes.com/2012/07/03/sports/basketball/with-eye-on-williams-nets-agree-to-acquire-joe-johnson.html|archive-url=https://web.archive.org/web/20220620053018/https://www.nytimes.com/2012/07/03/sports/basketball/with-eye-on-williams-nets-agree-to-acquire-joe-johnson.html?_r=1|archive-date=June 20, 2022|url-status=live}}</ref> Teams and players can reach verbal agreements, but they are not binding. Contracts can be signed once the moratorium ends.<ref name=cbafaq/> In 2015, [[DeAndre Jordan]] had reached a verbal agreement to sign with the [[Dallas Mavericks]], but changed his mind at the end of the moratorium and re-signed with the [[Los Angeles Clippers]].<ref>{{cite news|last=Morales|first=Robert|title=Adam Silver says
===Cap holds===
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! class="unsortable"|Ref
|-
| rowspan=18|{{nbay|2005|full}} || [[Dallas Mavericks]] || {{sortname|Michael|Finley}}|| rowspan=18|<ref name="2005 amnesty">{{cite web|url=https://www.sports-reference.com/blog/list-of-nba-players-waived-in-2005-under-allan-houston-rule-amnesty-clause/|title=List of NBA Players Waived in 2005 Under
|-
| [[Los Angeles Lakers]] || {{sortname|Brian|Grant}}
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| [[Portland Trail Blazers]] || {{sortname|Brandon|Roy}} || [[Minnesota Timberwolves]]<ref group=upper-roman>Roy initially retired from basketball due to persistent knee injuries and was then amnestied by Portland. However, after a year of inactivity, he returned to the NBA.</ref> || {{n/a}}
|-
| rowspan=8|{{nbay|2012|full}} || [[Philadelphia 76ers]] || {{sortname|Elton|Brand}} ||bgcolor=CFECEC|[[Dallas Mavericks]]* || $2,100,000 || <ref>{{cite news|last=Stein|first=Mark|title=Mavericks claim Elton Brand|date=July 13, 2012|work=ESPN|url=
|-
| [[Minnesota Timberwolves]] || {{sortname|Darko|Miličić}} || [[Boston Celtics]] || {{n/a}} ||<ref>{{cite news|last=Remme|first=Mark|title=Wolves Waive Darko Milicic|date=July 12, 2012|work=NBA.com|url=http://www.nba.com/timberwolves/news/wolves-waive-darko-milicic-0|archive-url=https://web.archive.org/web/20120715023941/http://www.nba.com/timberwolves/news/wolves-waive-darko-milicic-0|archive-date=July 15, 2012|url-status=live}}</ref>
|-
| [[Dallas Mavericks]] || {{sortname|Brendan|Haywood}} ||bgcolor=CFECEC|[[Charlotte Bobcats]]* || $2,000,500 ||<ref>{{cite news|last=Caplan|first=Jeff|title=Mavs officially use amnesty on Brendan Haywood|work=ESPN|url=
|-
| [[Houston Rockets]] || {{sortname|Luis|Scola}} ||bgcolor=CFECEC|[[Phoenix Suns]]* || $13,500,000 ||<ref>{{cite news|title=Suns claim Luis Scola off waiver wire, amnesty Josh Childress|date=July 16, 2012|work=SI.com|agency=Associated Press|url=http://sportsillustrated.cnn.com/2012/basketball/nba/07/15/suns-luis-scola-amnesty-auction.ap/index.html|archive-url=https://web.archive.org/web/20120719082543/http://sportsillustrated.cnn.com/2012/basketball/nba/07/15/suns-luis-scola-amnesty-auction.ap/index.html|archive-date=July 19, 2012|url-status=
|-
| [[Phoenix Suns]] || {{sortname|Josh|Childress}} || [[Brooklyn Nets]] || {{n/a}} || <ref>{{cite news|last=Young|first=Royce|title=Suns claim Luis Scola off waiver wire, amnesty Josh Childress|work=CBS Sports|url=http://www.cbssports.com/nba/blog/eye-on-basketball/19591424/suns-claim-luis-scola-off-waiver-wire-amnesty-josh-childress}}</ref>
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| [[Los Angeles Clippers]] || {{sortname|Ryan|Gomes}} || {{flagicon|GER}} [[Artland Dragons]] || {{n/a}} || <ref>{{cite news|url=http://www.nba.com/2012/news/07/18/clippers-gomes-waived.ap/index.html|title=Clippers waive Gomes as amnesty player|work=NBA.com|publisher=Turner Sports Interactive, Inc.|date=July 18, 2012|access-date=July 18, 2012|url-status=dead|archive-url=https://web.archive.org/web/20120718203742/http://www.nba.com/2012/news/07/18/clippers-gomes-waived.ap/index.html|archive-date=July 18, 2012}}</ref>
|-
| rowspan=5|{{nbay|2013|full}} || [[Los Angeles Lakers]] || {{sortname|Metta|World Peace}} || [[New York Knicks]] || {{n/a}} || <ref>{{cite news|url=
|-
| [[Charlotte Bobcats]] || {{sortname|Tyrus|Thomas}} || [[Iowa Energy]] || {{n/a}} || <ref>{{cite
|-
| [[Milwaukee Bucks]] || {{sortname|Drew|Gooden}} || [[Washington Wizards]] || {{n/a}} || <ref>{{cite news| url=https://www.sbnation.com/nba/2013/7/17/4531136/2013-nba-free-agency-rumors-news|publisher=SB Nation|date=July 17, 2013|title=NBA Free Agency rumors}}</ref>
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| [[Toronto Raptors]] || {{sortname|Linas|Kleiza}} || {{flagicon|TUR}} [[Fenerbahçe Men's Basketball|Fenerbahçe Ülker]] || {{n/a}} || <ref>{{cite news| url=https://sports.yahoo.com/news/nba--raptors-to-amnesty-linas-kleiza-084703294.html|publisher=Yahoo!|date=July 16, 2013|title=Raptors to amnesty Linas Kleiza}}</ref>
|-
| [[Miami Heat]] || {{sortname|Mike|Miller|dab=basketball,
|-
| {{nbay|2014|full}} || [[Chicago Bulls]] || {{sortname|Carlos|Boozer}} ||bgcolor=CFECEC|[[Los Angeles Lakers]]* || $3,200,000 || <ref>{{cite news|last=Johnson|first=K. C.|title=Bulls use amnesty provision on Boozer|date=July 15, 2014|newspaper=Chicago Tribune|url=http://www.chicagotribune.com/sports/basketball/bulls/chi-bulls-use-amnesty-provision-on-carlos-boozer-20140715,0,4360207.story|archive-url=https://web.archive.org/web/20140716221146/http://www.chicagotribune.com/sports/basketball/bulls/chi-bulls-use-amnesty-provision-on-carlos-boozer-20140715,0,4360207.story|archive-date=July 16, 2014|url-status=live}}</ref>
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