Ten NBA teams are still operating in luxury tax territory in the wake of last Thursday’s trade deadline, but this season’s total projected luxury tax payments – and the clubs projected to be taxpayers – have declined significantly in recent weeks.
As of January 23, a total of 14 teams projected to be taxpayers, Bobby Marks of ESPN (Twitter links) observes, with the 16 non-taxpayers on track to receive about $17.8MM apiece, which would have been the largest payout in NBA history.
But the Cavaliers, Pelicans, Clippers, and Sixers all ducked the tax line with their pre-deadline moves, while a few other teams remained in the tax but took steps to significantly reduce their end-of-season bills. Milwaukee, for instance, had been projected to pay about $74.8MM in tax penalties, but has since reduced that figure by more than half, according to Eric Pincus of Sports Business Classroom.
Here are the current projected tax penalties, per Pincus’ data:
- Phoenix Suns: $152.26MM
- Minnesota Timberwolves: $84.85MM
- Boston Celtics: $53.45MM
- Los Angeles Lakers: $52.53MM
- New York Knicks: $36.45MM
- Milwaukee Bucks: $32.66MM
- Denver Nuggets: $20.36MM
- Golden State Warriors: $12.36MM
- Dallas Mavericks: $6.39MM
- Miami Heat: $4.18MM
Total: $455.49MM
These numbers will fluctuate a little before the end of the season. For instance, the Lakers recently increased their projected bill when they signed Alex Len to a rest-of-season contract, and the Warriors will need to make multiple roster additions in the near future, which will cause their bill to rise. Various contract incentives that go earned or unearned could also impact the end-of-season tax figures.
Based on the current figures from Pincus, each non-taxpayer is projected to receive a payout of about $11.4MM. That figure is determined by cutting the total league-wide tax penalties in half, then dividing them evenly among the non-taxpaying teams (in this case, 20 clubs).
As significant as the Suns’ tax penalty projects to be, especially for a team currently flirting with .500, it won’t be a single-season record — Golden State has actually exceeded $152.26MM in tax payments in each of the past three years (2022-24).
Assuming these are the 10 teams that finish the season in tax territory, the Celtics, Nuggets, Warriors, Clippers, Lakers, Bucks, and Suns would all be subject to repeater penalties in 2025/26 if they’re taxpayers again next season.