The NBA has announced that the Salary Cap for next season will be $58.679 million and teams will be subject to Luxury Tax if their player salaries exceed $71.748 million.
The Cap and Tax levels go into effect on July 10 immediately after the league’s July Moratorium period ends and teams can begin signing free agents and making trades.
Under the new CBA signed two seasons ago, luxury tax rates are set to increase from the previous $1 tax for each $1 a team’s player salaries exceeded the tax level. The new tax rate schedule follows.
$0-$4.99 million over tax level: $1.50 for $1
$5-$9.99 million over tax level: $1.75 for $1
$10-$14.99 million over tax level: $2.50 for $1
$15-$19.99 million over tax level: $3.25 for $1
Plus an additional $0.50 on each additional $5 million increment of team salary.
The new Repeater Tax negotiated in this CBA will not come into effect until after this season. In 2014-2015, teams will pay an additional $1 for $1 Repeater Tax if they were taxpayers in all of the previous three seasons.
NBA teams are also subject to a minimum level for player salaries. The minimum team salary for next season is $52.811 million which is 90% of the Salary Cap.
The new CBA provides for three different mid-level exceptions depending on a team’s salary level:
The Non-Taxpayer Mid-Level for this season is $5.15 million;
The Taxpayer Mid-Level is $3.183 million; and,
A Mid-Level Room Exception of $2.652 million is available for teams with room under the Salary Cap.
There is also a Bi-Annual exception available to teams in alternate years of $2.016 million.
Both the Non-Taxpayer Mid-Level exception and the Bi-Annual exception cannot be used if the transaction will take the team above the Apron. The Apron has been set at $4 million above the Tax or $75.748 million. Teams above the Apron cannot use the Bi-Annual exception.
It is important to note:
A team using its Non-Taxpayer Mid-Level exception or Bi-Annual exception effectively becomes subject to a hard cap for the remainder of that season set at the Apron or $75.748 million. This hard cap cannot be exceeded, even if the future signings or trades would otherwise have been permitted.
The Taxpayer Mid-level exception must be used if the transaction will take the team above the Apron.
This is the information teams have been waiting for in order to finalize their offers to this year’s free agent crop.
Stephen Brotherston has covered the Toronto Raptors and visiting NBA teams at the Air Canada Centre since 2009. A member of the Professional Basketball Writers Association, Stephen is the editor and publisher of Pro Bball Report.