Michael Blackshire
To limit spending, the NBA sets a luxury tax limit each season (currently $170.8 million). Teams that exceed this limit pay a penalty. The league uses half of the money for revenue sharing, and the rest is distributed to the tax-exempt teams.
For example, eight teams were above the threshold in the 2023-24 season, paying a total of $526.6 million in taxes. Half of that amount ($263.3 million) went back to the 22 teams below the threshold, each paying nearly $12 million.
If a franchise had to pay taxes even once, the total tax rebate since the beginning of the Collective Bargaining Agreement (CBA) in 2017 through the first year of the current CBA in 2024 was $46.5 million.
Rule of thumb: If your team has a net tax amount of -$46.5 million, they were stingy.
Context is crucial, especially when you consider that the New York Knicks have gradually become a playoff contender and are now finally starting to pay taxes for a team they believe can win.
Similarly, the Minnesota Timberwolves pay almost no taxes but have one of the highest payrolls in the league in 2024/25. Some teams have gotten by without spending much, like the Indiana Pacers, who recently made it to the Eastern Conference Finals with one of the lowest payrolls in the league.
The following list details all 30 NBA franchises, their net tax burden from 2017 to 2024, their postseason record, and their projected tax burden for the upcoming season:
