NBA Teams To Get Lowest Luxury Tax Check Since Pandemic

The check NBA teams receive from their peers in the luxury tax will be lighter this year. 

On Sunday, the league’s regular season concluded, with 23 teams avoiding the tax line—and the penalties that come with it—altogether. The result is that those teams each get a payout projected at $4.9 million, the lowest since the truncated 2020–21 season, which was limited to 72 games because of the COVID-19 pandemic. A year ago, tax payouts were more than double this year’s figure at $11.4 million.

The seven teams that finished in the luxury tax are the Cavaliers, Warriors, Knicks, Lakers, Rockets, Clippers, and Timberwolves. All seven teams are in the playoffs or play-in tournament, the latter of which begins on Tuesday. The playoffs start on Saturday.

The Cavaliers had the highest tax penalty of any team at $68.7 million, according to ESPN’s Bobby Marks. Cleveland was the lone team to start the season in the second apron and is the No. 4 seed in the Eastern Conference. The team made perhaps the biggest in-season trade of the season when it swapped guard Darius Garland for James Harden in February.

Before the Feb. 5 trade deadline, 14 teams were projected to finish in the luxury tax. But a slew of cost-saving trades before the deadline resulted in half of those teams maneuvering to avoid the tax. The Cavaliers were projected to pay $164 million in penalties before the deadline, but slashed nearly $100 million off that figure by shedding players such as De’Andre Hunter and Lonzo Ball in trades with the Kings and Jazz, respectively.

The Warriors had the second-highest penalty of $67.9 million and limp into the play-in after injuries to Stephen Curry and Jimmy Butler. The Knicks’ penalty was the third-most expensive at $44.4 million; New York is the No. 3 seed in the East. 

There is a major drop off in penalties after the Knicks. The Lakers will pay just $22.2 million in taxes while the Rockets ($7.2 million), Clippers ($6.7 million), and Timberwolves ($6 million) will all pay seven-figure bills. The decline in tax teams comes a year after the NBA Finals featured two non-tax teams for the first time in 20 years when the Thunder defeated the Pacers in seven games. 

This season, the top two teams in both conferences are non-tax teams in the Thunder, Spurs, Pistons, and Celtics. Boston ended last season with a projected $500 million payroll for this season, but made multiple trades over the past eight months to get out of the tax altogether, while winning 56 games despite the roster moves.

Bonuses Continue To Decline

It’s not just tax teams that will be receiving smaller payouts this season. 

For the second consecutive year, individual player bonuses amounted to just a handful as the tax aprons continue to dissuade teams from including them in contracts. Bonuses count towards the apron, even if a player doesn’t achieve them. 

Just 36 players had 133 different incentives in their contracts this season, according to Marks. The ESPN analyst reports that 114 of those incentives didn’t materialize, while 15 are still pending and just four hit. 

The four players who received bonuses were Saddiq Bey, Kevin Durant, Khris Middleton, and Derrick White. Bey netted an extra $111,000 for games played (72) after missing all of last season due to a torn ACL. Durant earned $1.43 million for being named an All-Star, and White received $1.75 million for playing in 77 games. Similar to Bey, Middleton will be paid an extra $1.79 million for playing in 63 games a year after an injury-riddled season limited him to just 37 games a year ago.