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Luxury tax 2024-25: How much is each NBA team projected to spend?

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The NBA has had a luxury tax for more than twenty years, but only over the last few have the numbers grown exponentially. In the 2019-20 season, the entire NBA paid only $10,143,106 in luxury tax combined; in 2022-23, that grew to over $670 million.

With each new Collective Bargaining Agreement, the luxury tax rules get tweaked. Where once the tax was a dollar-for-dollar affair, amounts now vary via thresholds based on the amount a team is paying, and whether they have paid it in past seasons. While in recent years, myriad factors – from the new TV deal to the huge growth in the salary cap – have meant much greater revenues and franchise values around the league, now many ownership groups are feeling a pinch.

What continues to be true, though, is that the amounts paid in luxury tax are distributed amongst the teams that do not pay. As will be seen below, 15 teams – exactly half the league – are projected to pay almost exactly $600 million in luxury tax in the 2024-25 season, which means the other half of the league stands to get a proportional share of that. There is therefore incentive to get under the threshold for those who are close to it. But as will be seen, some teams have no chance of that.

The luxury tax threshold for the 2024-25 NBA season has been set at $170,814,000. With this in mind, here’s a projection at this point in time of each NBA luxury tax payer this year.

2024-25 Payroll: $220.4 million

2024-25 Luxury Tax Payment: $188.49 million

2024-25 Combined Payroll and Luxury Tax Payment: $408.89 million

In the Suns’ offseason preview piece here at HoopsHype, it was noted quite how committed they were to their current make-up, whether they liked it or not. One summer later, and this is no less true. Tied down by the enormous salaries to their trio of Devin Booker, Bradley Beal and Kevin Durant, they are effectively limited to the minimum salary in order to improve. And while they have been able to acquire absolute bargains in the forms of Tyus Jones and Monte Morris using that exception this season, they will need to keep doing so, because their tax entanglement is not going anyway any time soon.

2024-25 Payroll: $205.56 million

2024-25 Luxury Tax Payment: $105.62 million

2024-25 Combined Payroll and Luxury Tax Payment: $311.18 million

The only team other than the Suns with more than a $300 million combined in salary and tax bills are the Wolves, who have also cemented themselves in place with a hugely expensive Big Three. Karl-Anthony Towns, Rudy Gobert and Anthony Edwards are all on huge salaries, and will be for a while. Yet even if the Wolves had any regrets about this, they would be hard pushed to do much about it, given the inflexibilities in trade that teams over both aprons face.

2024-25 Payroll: $196.57 million

2024-25 Luxury Tax Payment: $65.60 million

2024-25 Combined Payroll and Luxury Tax Payment: $262.17 million

Over the second apron, teams are functionally limited to just using the minimum salary contract to add external free agents. It is highly restrictive by design. However, if you are the defending NBA champion, you have two things working for you that will offset that. Firstly, the lure of competitiveness and all the eyes that will be watching lead players to take significant discounts. And secondly, by already being the best, there is not much to add. The Celtics therefore have the third-highest payroll in the league and substantial tax penalties forthcoming, but it has not cost them anything on the court.

2024-25 Payroll: $193.10 million

2024-25 Luxury Tax Payment: $74.84 million

2024-25 Combined Payroll and Luxury Tax Payment: $267.94 million

Having been over the threshold in each of the last three seasons, the Bucks are paying repeater tax rates. And while this has not seen them ease off of their win-now approach – which, having given away almost all of their remaining assets in last year’s trade for Damian Lillard, they could not do even if they wanted to – it does mean that they cannot spend much more than this. For each dollar spent here on out, it will cost the Bucks $4.25 dollars in tax, which makes each veteran minimum salary contract cost approximately eight figures. As a deterrent, then, it is working.

2024-25 Payroll: $188.19 million

2024-25 Luxury Tax Payment: $53.16 million

2024-25 Combined Payroll and Luxury Tax Payment: $241.35 million

The Lakers are also paying repeater rates, and the difference between their combined commitments and Milwaukee’s above speak to the punitive effects of the repeater rates. For a mere $5 million less in salary, they are projected to be spending more than $30 million less. And bear in mind that a team’s luxury tax payments are based on their payroll situation at the end of the season; just like all teams in this list, then, the Lakers have the time to reduce that bill if they so choose.

2024-25 Payroll: $185.22 million

2024-25 Luxury Tax Payment: $26.96 million

2024-25 Combined Payroll and Luxury Tax Payment: $212.18 million

Usually, the Heat operate around the luxury tax threshold, but just about stay under it. In both 2021-22 and 2022-23, for example, they were a mere $1 million under. But they will be glad that they were, because doing so has meant they are not paying repeater tax rates on this year’s payroll, which is more than $14 million above the threshold as things stand. And while this has meant not much in the way of offseason spending this summer, it has also meant not having to dump any salary. Yet.

2024-25 Payroll: $182.57 million

2024-25 Luxury Tax Payment: $20.36 million

2024-25 Combined Payroll and Luxury Tax Payment: $202.93 million

Whether it is the main intention or just a by-product, the reportedly contentious decision by the Nuggets’ front office to go with youth on the bench has meant having an added degree of cost control. After all, young players are cheaper than veterans. So while the Nuggets are subject to the tax and aprons, they are not handcuffed by them, and have the financial flexibility to reverse that course and be buyers at the deadline if they so desire.

2024-25 Payroll: $181.51 million

2024-25 Luxury Tax Payment: $17.70 million

2024-25 Combined Payroll and Luxury Tax Payment: $199.21 million

The Sixers did not put themselves into a position where their only player under contract was Joel Embiid – the most absolutist approach to free agency that any team has taken since the circus of 2010 – just to then shirk spending. They did not take aim at Paul George from at least two years out, and pair him with Embiid, just to then draw the line there. They’re all in. And so while they are over the tax and will continue to be so in future years, it is something they knew (and hoped) would come. Presumably, ownership budgeted accordingly.

2024-25 Payroll: $179.19 million

2024-25 Luxury Tax Payment: $13.36 million

2024-25 Combined Payroll and Luxury Tax Payment: $192.55 million

When the Knicks take their title shots, the money is there to back it up. The league’s highest-ever taxpaying team throughout the vehicle’s first decade of its existence are funded by the deep pockets of the ownership group, Madison Square Garden Sports and Entertainment. The money is available to pile on the payroll, even as the options for doing so dwindle with each new CBA. And this is what the Knicks have done. Within the last year, they have acquired Miles Bridges and OG Anunoby, knowing both would need big paydays some day soon. Anunoby got his, and Bridges will do soon. There will be no tax let-up for a while, and nor will one be sought.

2024-25 Payroll: $176.60 million

2024-25 Luxury Tax Payment: $14.61 million

2024-25 Combined Payroll and Luxury Tax Payment: $191.21 million

Over the last decade, the Warriors have blown all manner of NBA luxury tax records out of the water. By way of example – but not the only example –  they paid $170,331,194 in luxury tax in the 2021/22 season alone, a single year payment by one team only that was nonetheless bigger than the cumulative amount every team paid in any prior season except in 2002/03. They pioneered paying nine figures a year when very few were paying even eight. And they dragged the rest of the top half of the league along with them.

Those days are over, however. Klay Thompson has gone, and with it has gone the enormous payroll commitments – with the advent of the aprons and the restrictions they bring, the Warriors simply cannot add that much payroll any more. The repeater tax rates remain, but there is very little excess to pay tax on, to the point that it might be possible and sensible for Golden State to get under the threshold altogether by moving around some bench pieces.

2024-25 Payroll: $176.14 million

2024-25 Luxury Tax Payment: $8.03 million

2024-25 Combined Payroll and Luxury Tax Payment: $184.17 million

In being able to get Klay Thompson for such a discount – his 2024-25 salary of $15,873,016 is a huge saving on his $43,219,440 of last season, and will be the biggest salary cut in the league – the Mavericks are only just dipping into the tax. They have assembled their core Big Three, recognize there is a title window open, and were still willing to add Naji Marshall for an MLE salary. It seems both unlikely and unnecessary, then, that they will do any work to get under the threshold, even after doing so for all but one season between 2012 and 2024.

2024-25 Payroll: $173.28 million

2024-25 Luxury Tax Payment: $6.16 million

2024-25 Combined Payroll and Luxury Tax Payment: $179.44 million

Having been taxpayers in each of the last three seasons – and paying more than $220 million purely in tax penalties the last two seasons, even before any salary payments – there is no reason for the Clippers to do so again. Any overage they accumulate will be charged at the much more punitive repeater tax rate, and the point of those previous sky-high financial commitments was to build a competitive team around the pairing of Kawhi Leonard and Paul George. There is no such pairing anymore, there never was much competitiveness, and so now, there is no reason to pay anything. The Clippers will therefore surely find a way to dip under, give themselves some respite from the repeater rates, and find a way to start again.

2024-25 Payroll: $172.50 million

2024-25 Luxury Tax Payment: $2.53 million

2024-25 Combined Payroll and Luxury Tax Payment: $175.03 million

Cleveland has the money to spend if they want, and are willing to do so at the top of the roster, as evidenced by the sizeable extension signed by Donovan Mitchell this summer. That does not mean, though, that they need to pay the tax. Over the threshold by only about a veteran’s minimum salary, they should be able to finagle their way under without changing the top of the rotation. But if they do decide to trade any key rotation pieces between now and the deadline, it might benefit them to do so while staying under the tax threshold, so as to forestall any repeater tax penalties.

2024-25 Payroll: $172.37 million

2024-25 Luxury Tax Payment: $2.34 million

2024-25 Combined Payroll and Luxury Tax Payment: $174.71 million

The Pelicans will be up against the luxury tax if they keep any of the unguaranteed salaries of Matt Ryan, Elfrid Payton, Keion Brooks Jr, Galen Robinson Jr or Izayah Brockington. Without them, they have only 13 players under contract – which is permissible, but only for two weeks at a time – and are ever so slightly under the threshold. They could spend the year making the small maneuvers required to stay on the lucrative side on the line without getting too short of players. Or they could just make a priority of taking back less salary in any Brandon Ingram trade, if there is one.

2024-25 Payroll: $170.97 million

2024-25 Luxury Tax Payment: $0.24 million

2024-25 Combined Payroll and Luxury Tax Payment: $171.21 million

Do not expect the Pacers to remain taxpayers come the season’s end. They historically have rarely done so, and in being so marginally over the threshold, they will surely find a way to get under it. Such a tiny payment would not be the problem, but the loss of the rebate – and the starting of the repeater tax clock, which might not be a factor later on given the franchise’s smaller budgets but which need not be triggered when it is not necessary –  make it worth the one or two moves needed to duck the threshold. So at least one of the Cole Swider or James Wiseman types near the end of the bench should be considered unlikely to see out the season.

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