Teams Lobbying For Higher Tax Line In 2020/21

Even if the NBA’s salary cap doesn’t end up increasing at all for the 2020/21 season, teams are lobbying for a bump in the luxury tax line, according to ESPN’s Bobby Marks (Twitter link).

In 2019/20, the cap was set at approximately $109.1MM, with the luxury tax line at $132.6MM. Generally, the tax threshold is directly tied to where the cap lands, so if the ’20/21 cap remains at $109.1MM, the tax line would remain unchanged too. Teams that cross the tax line must pay a penalty for each extra dollar they spend.

[RELATED: Hoops Rumors Glossary: Luxury Tex Penalties]

However, given the unusual financial circumstances dictated by the coronavirus pandemic, clubs are hoping the NBA will consider artificially setting next season’s tax level at around $139MM, with a $145MM tax apron, says Marks. Those are approximately the figures the NBA had projected before the pandemic, when the league was forecasting a $115MM cap for 2020/21.

It’s not hard to see why teams – or at least the teams without cap room – would be pushing for a higher tax line. The pandemic has already had a major financial impact on many clubs, and having to pay bigger tax bills than initially expected would only exacerbate those financial woes. Increasing the apron – which serves as a hard cap in certain situations – would also give teams more roster flexibility.

While it’s not clear how the NBPA feels about the issue, there’s incentive for them to favor artificial changes to the tax line as well. Increasing the tax level certainly doesn’t guarantee that teams will put those savings toward player salaries, but it would likely make at least some clubs more willing to be active in free agency and open to taking on money in trades, which would benefit players.

As cap expert Albert Nahmad points out (via Twitter), there are a number of other ways the NBA and NBPA could temporarily tweak the luxury tax rules for the 2020/21 season to lessen the risk of a widespread spending freeze. Besides artificially increasing the tax threshold, the two sides could explore reducing taxpayer penalties or waiving the more punitive repeater tax penalties altogether.

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10 thoughts on “Teams Lobbying For Higher Tax Line In 2020/21

  1. Sillivan

    Big IF
    With Tax line at $170 million,free agents can sign bigger contract

    • bdpecore

      Where are you getting the $170 million number? The article states 139.1 million tax line and $145 million apron.

  2. Presumably the teams asking for this are those that are on schedule to pay the luxury tax. Not those who figure to receive proceeds.

    I don’t see the case for divorcing the tax line from the cap. Tax line is principally a soft salary ceiling (not a revenue raiser), and the apron, when applicable, is a hard salary ceiling. Just like the cap. Letting the cap move as agreed, but not the tax and apron would mean that teams operating in or near tax territory wouldn’t need to change their off season plans, but those who are relying on cap space would.

    • harden-westbrook-mvps

      The Warriors are looking at a huge luxury tax bill, they have the most to lose here. If they go on a spending spree like most people are expecting, that bill will end up doubling itself to over $100M.

      • If they use their TPE, keep #2 pick, and use TxMLE, then – on quick look – I think it’s more like 135-140 mm in tax based on last year’s tax line (130 mm). If that goes down by the percentage shortfall in BRI, it’s well over 200 mm. But I don’t think the league does nothing and allows that. Probably should just use last year’s numbers across the board.

    • Regi Green

      It’s actually the opposite,teams with cap space wouldn’t need to change their plans,and teams over the cap would adjust their plans if there were any adjustments.Teams over the cap weren’t previously spending with the idea that they wouldn’t have fans attending games.

      • Really? I think if a team thought they were going to have 25 mm in cap space, and instead they have only 10 mm, then they have to change their plans.

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