Teams Close To The Tax Line

February 17 2013 at 11:56am CST By Chuck Myron

As Thursday's trade deadline approaches, one of the most pressing concerns for many league executives will be whether a proposed deal will push their teams into or out of the league's luxury tax. This year, the tax threshold is $70.307MM, and any team that finishes the season above that figure must pay the league a dollar for each dollar it exceeds the cap.

Next season, the penalties become even more severe, as taxpaying teams will have to pay at least $1.50 for every dollar over. Teams above the tax "apron," the point $4MM above the tax line, will no longer be able to accept players in sign-and-trade deals as of this summer. In 2014/15, teams that have been taxpayers for at least three years in a row get socked with an even stiffer tax rate of at least $2.50 for each dollar over. Executives who are looking ahead may want to avoid the tax this year to get out of that repeater rate.  

The league uses a slightly different formula than its standard team salary measurements to determine which teams must pay the tax, counting only the bonus money the team pays out at the end of the year, rather than projected figures. The NBA also adds the difference between a first- or second-year player's minimum salary and what a third-year player would make to a team's tax figure, moving some clubs a few hundred thousand dollars higher. That means some teams are either slightly closer or farther away from the tax than indicated here, but not by so much that it pushes a club over or under the line.

The Grizzlies have already made a pair of trades that took them from about $4MM over the tax line to more than $8MM below it. So, they're not on either list here showing teams less than $5MM above and below the tax. The numbers have been rounded to the nearest $1K.

Teams less than $5MM above tax line

  • Warriors: +$849K
  • Celtics: +$1.275MM 
  • Bulls: +$3.754MM

Teams less than $5MM below tax line

  • Spurs: -$749K
  • Thunder: -$826K
  • Clippers: -$953K
  • Pistons: -$1.741MM
  • Jazz: -$3.237MM
  • Hawks: -$3.378MM
  • Raptors: -$3.379MM
  • Pacers: -$4.013MM

HoopsWorld, ShamSports and Larry Coon's NBA Salary Cap FAQ were used in the creation of this post.

blog comments powered by Disqus