In the wake of 2016’s salary cap spike, the luxury tax line was higher than ever in 2016/17, and only two teams finished the season above it. The Clippers barely crossed over into taxpayer territory, while the Cavaliers blew past that threshold and were on the hook for a big tax bill.
In 2017/18, the salary cap increase was far more modest, and as a result, it appears that several more teams will finish the season as taxpayers, surpassing this year’s $119.266MM tax line. Teams have until the end of the ’17/18 regular season to adjust team salary in an effort to get back under the tax line, but most of those clubs will have little leverage if they try to dump salary, so it won’t be easy to cut costs.
Here’s an early look at the teams likely to finish 2017/18 as taxpayers:
Current guaranteed team salary (approximate): $139.73MM
No team is further over the tax line than the Cavaliers, and Cleveland will also qualify as a repeat taxpayer for the first time this year, making the penalties levied against the franchise more punitive. Currently, the Cavs’ projected tax bill is approaching $70MM, which explains why the team is interested in attaching an extra contract or two to Kyrie Irving in any trade.
Golden State Warriors
Current guaranteed team salary (approximate): $135.36MM
Last year’s dominant Warriors team actually didn’t have one of the more expensive rosters in the league, but that will change this time around, with several players signing lucrative new deals. The biggest raise belongs to Stephen Curry, who played out the final season of a four-year, $44MM deal in 2016/17, and will now start a five-year, $200MM+ pact.
Oklahoma City Thunder
Current guaranteed team salary (approximate): $125.99MM
Years ago, the Thunder decided to move on from James Harden when he and the team couldn’t agree to terms on an extension that would have created luxury-tax issues for the franchise. Now, Oklahoma City has the third-highest team salary in the NBA, and a projected tax bill that will exceed $10MM.
Portland Trail Blazers
Current guaranteed team salary (approximate): $124.25MM
The Trail Blazers managed to slash their projected tax bill significantly a couple weeks ago when they sent Allen Crabbe to the Nets for Andrew Nicholson. Assuming they eventually waive and stretch Nicholson’s contract, as expected, the pair of transactions will save the club upwards of $40MM in tax payments alone.
Current guaranteed team salary (approximate): $123.54MM
Going into tax territory was necessary if the Wizards wanted to match Otto Porter‘s offer sheet from the Nets and bring him back. Fortunately for the club, John Wall‘s new super-max extension won’t go into effect until 2019/20 — his current salary is far below the 2017/18 max, which will save the Wizards from paying more exorbitant tax penalties.
Current guaranteed team salary (approximate): $119.38MM
The Bucks currently project to be over the tax threshold by a very small amount, and I’d be surprised if the team doesn’t make every effort to trim payroll and sneak below that line before the season is over. Milwaukee isn’t a big-market team, and the opportunity to be on the receiving end of the luxury tax – rather than the paying end – will be tantalizing.
Outside of the six teams listed above, a handful of other clubs are inching dangerously close to tax territory. Among them: The Clippers, whose estimated guaranteed team salary sits about $100K below the tax threshold; the Pelicans, who are less than $1MM below the tax line; and the Rockets, who only have about $114.75MM in guarantees, but are carrying several million more dollars in non-guaranteed contracts.