---
description: NBA teams continue to sign bigger and bigger contracts and stretch the financial limits. So what is the NBA salary cap? How does it work?
title: The NBA Salary Cap: Your Biggest Questions Answered
image: https://cdn.oddspedia.com/images/betting/2025/07/USATSI_8132582_168400032_lowres-1-1200x1200.jpg
---

The [NBA](https://oddspedia.com/ca/basketball/usa/nba) features some of the most lucrative contracts in sports. With those lucrative contracts and big money being spent all across the league comes measures to ensure competitive balance.

The NBA salary cap was introduced during the 1984-85 season to promote competitive balance among teams by limiting the total amount of money a team could spend on player salaries.

> Managing cap space effectively allows teams to sign new players and retain key personnel…

The NBA salary cap affects team building, trades and free agency. Understanding its rules is key to grasping how NBA rosters are constructed and managed.

Let’s take a look at the ins and the outs of the NBA salary cap:

## The NBA Salary Cap: Your Questions Answered

### What is a salary cap?

A salary cap limits the money a sports team can spend on player salaries. It is designed to promote competitive balance by preventing wealthier teams from accumulating all the top talent. 

In professional leagues like the NBA, the salary cap is determined by collective bargaining agreements between the league and players’ association.

### What is the NBA salary cap?

The NBA salary cap limits how much money NBA teams can spend on player salaries in a given season. This limit is established each year based on the league’s Basketball Related Income (BRI). 

This includes revenue from ticket sales, tv deals, sponsorships, merchandise and more. After the NBA and the players’ union project total BRI, a set percentage is allocated to players.

### How does the NBA salary cap work?

Based on the projected BRI, NBA players earn a set percentage (currently around 44.74%). That total amount is divided by the 30 teams to set the salary cap for the upcoming season. 

This ensures players receive roughly half of the league’s revenue while giving teams a consistent spending limit.

### What is ‘cap space’ in the NBA?

Cap space in the NBA refers to the amount of money a team has available under the salary cap to spend on player salaries. It is calculated by subtracting the total salaries of all players under contract from the salary cap limit set by the league. 

Managing cap space effectively allows teams to sign new players and retain key personnel.

#### RELATED: Will the Oklahoma City Thunder go back-to-back? Check out the [NBA Championship odds](https://oddspedia.com/insights/basketball/nba-championship-odds) to see top contenders to the Thunder’s crown.

### What is the NBA salary cap for 2025?

The NBA salary cap for the 2025-26 season is $154.647 million. This is a 10% increase from the 2024-25 season. 

This cap determines the maximum amount teams can spend on player salaries for the upcoming season, impacting roster decisions and contract negotiations.

### How is the NBA salary cap calculated?

According to the current Collective Bargaining Agreement, the NBA salary cap is 44.74% of the projected BRI. 

That number is divided by the 30 teams to set the standard salary cap for all teams. The salary cap typically increases each season to account for inflation and growing profits of the league.

### When did the NBA salary cap start?

The NBA salary cap started in the 1984-85 season as the league attempted to level the playing field among the NBA teams and ensure competitive balance. 

In the first season under the salary cap, each team was limited to $4.6 million in total payroll. The NBA did have a salary cap in the mid-1940s, but it was abolished after just one season.

### Who has the most cap space in the NBA?

According to salary cap and contract website _Salary Swish_, the Brooklyn Nets have the most cap space in the NBA for the 2025-26 season. This gives them the most spending flexibility among the 30 teams in the league. 

The Utah Jazz have the second-most cap space in the NBA for the 2025-26 campaign.

### Which teams are above and below the NBA Salary Cap?

### What does ‘dead cap’ mean in the NBA?

Dead cap refers to the salary cap space taken up by players that are no longer on a team’s roster. Dead cap is typically accumulated from waived players with guaranteed contracts, stretch provisions (salary spread over several years) and buyouts or certain trades. 

Dead cap limits a team’s flexibility because it occupies cap space without providing active player value.

### What is a cap hit?

A cap hit in the NBA is the amount of a player’s salary that counts against a team’s salary cap for a given season. 

It reflects the financial impact of a player’s contract on the team’s cap, regardless of how or when the money is actually paid. Cap hits can vary based on contract structure, bonuses and more.

### What is the veteran minimum in the NBA?

The veteran minimum in the NBA is the minimum salary a team must pay a player based on their years of experience in the league. 

The veteran minimum, which requires players to have 10+ years of experience, is about $3.3 million. The minimum salary for rookies is about $1.1 million.

## How The NBA Salary Cap Works: A Deep Dive

To put it simply, the NBA salary cap is a limit on how much a team can pay its players in a single season. The NBA salary cap for the 2025-26 season is $154.647 million, based on the players, as a group, receiving 44.74% of the league’s BRI.

#### RELATED: Where will these NBA stars play next season? Check out the [LeBron James next team odds ](https://oddspedia.com/insights/basketball/lebron-james-next-team-odds)to find out.

How a team spends its cap is entirely their choice, however they must not exceed the number agreed by the league without exceptions and penalties. They also can’t underspend either. Teams are required to spend at least 90% of the cap, which is about $139.182 million for the 2025-26 season.

### What happens if a team exceeds the salary cap?

If an NBA team exceeds the salary cap, they can still sign players, but they’re limited by specific exceptions and they could face luxury tax penalties.

#### The Soft Cap

The NBA has a “soft cap” system, unlike the [NFL](https://oddspedia.com/ca/football/usa/nfl) and [NHL](https://oddspedia.com/ca/hockey/usa/nhl) which have hard caps. The NBA’s soft salary cap allows teams to go over the cap using exceptions, such as:

* Bird Rights: Re-signing your own free agents
* Mid-Level Exception (MLE): Used to sign players when over the cap
* Bi-Annual Exception: For smaller contracts, usable every other year
* Minimum Salary Exception: Teams can always sign players to minimum deals

Exceeding the cap doesn’t stop a team from signing players. It just changes how they can sign players.

#### Luxury Tax

There are financial penalties if a team goes above the luxury tax threshold, which is $187.895 million for the 2025-26 season. Here is how much those financial penalties are:

| Amount Over Tax Line | Tax Rate For First Offense |
| -------------------- | -------------------------- |
| $0-$4.99 million     | $1.50 per $1 over          |
| $5-$9.99 million     | $1.75 per $1 over          |
| $10-$14.99 million   | $2.50 per $1 over          |
| $15-$19.99 million   | $3.25 per $1 over          |

The tax rate keeps increasing by $0.50 per $1 over for every $5 million. Also, repeat offenders pay even more in penalties.

#### Second Apron Penalties

If a team exceeds the second tax apron, which is approximately $209 million for the 2025-26 season, they would face major roster building restrictions, such as:

* Can’t sign buyout players who made more than the mid-level
* Can’t use the mid-level exception at all
* Can’t aggregate salaries in trades
* Can’t trade future first round picks
* No sign-and-trades

## How Much Cap Space Does Each Team Have?

Here is a breakdown of where each team stands relative to the 2025-26 salary cap.

### Under the cap

| Team                                                                         | Cap Space       |
| ---------------------------------------------------------------------------- | --------------- |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/28656.png) Brooklyn Nets | $12.403 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9797.png) Utah Jazz      | $3.792 million  |

Data from _Salary Swish_ – accurate as of July 10

### Over the cap

| Team                                                                                 | Cap Space         |
| ------------------------------------------------------------------------------------ | ----------------- |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9793.png) Detroit Pistons        | \-$9.893 million  |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9792.png) Milwaukee Bucks        | \-$12.546 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9785.png) Portland Trail Blazers | \-$17.874 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9787.png) Golden State Warriors  | \-$18.405 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9803.png) Memphis Grizzlies      | \-$19.446 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9789.png) Washington Wizards     | \-$20.653 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/1089.png) Indiana Pacers         | \-$22.132 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/1361.png) San Antonio Spurs      | \-$22.995 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9790.png) Chicago Bulls          | \-$24.527 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9791.png) Atlanta Hawks          | \-$27.736 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9795.png) Charlotte Hornets      | \-$28.902 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9801.png) Sacramento Kings       | \-$30.361 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9786.png) New Orleans Pelicans   | \-$30.934 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9799.png) Los Angeles Clippers   | \-$33.642 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9796.png) Denver Nuggets         | \-$34.409 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/28657.png) Philadelphia 76ers    | \-$34.740 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/1360.png) Oklahoma City Thunder  | \-$35.118 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/1090.png) Miami Heat             | \-$35.915 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9794.png) Orlando Magic          | \-$40.097 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9788.png) Toronto Raptors        | \-$40.792 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9804.png) Houston Rockets        | \-$41.289 million |

Data from _Salary Swish_ – accurate as of July 10

### Over the first apron

| Team                                                                                 | Cap Space         |
| ------------------------------------------------------------------------------------ | ----------------- |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9802.png) Los Angeles Lakers     | \-$44.207 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9798.png) Minnesota Timberwolves | \-$45.225 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9784.png) New York Knicks        | \-$50.732 million |

Data from _Salary Swish_ – accurate as of July 10

### Over the second apron

| Team                                                                              | Cap Space         |
| --------------------------------------------------------------------------------- | ----------------- |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/28653.png) Boston Celtics     | \-$53.508 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9805.png) Dallas Mavericks    | \-$54.650 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9800.png) Phoenix Suns        | \-$64.923 million |
| ![](https://cdn.oddspedia.com/images/teams/medium/3/9783.png) Cleveland Cavaliers | \-$74.186 million |

Data from _Salary Swish_ – accurate as of July 10

## The Evolution Of The NBA Salary Cap

  
In 1949, the NBA salary cap was just $55,000 and it was abolished after just one season. Players made a few thousand dollars per season and many of them worked other jobs to make more money.

Even in the early 1950s, players were averaging less than $10,000 per year with no benefits.

Boston Celtics point guard Bob Cousy brought together other star players to create a players’ union. The NBA officially recognized the National Basketball Players Association in 1957 and the first NBA Collective Bargaining Agreement (CBA) was ratified in 1964.

Rookie contracts and veteran minimum deals were created in the late 1960s as the NBA began to really take shape and look like it does today.

In the 1970s, Oscar Robertson fought to add free agency, which was eventually added in 1976.

The first official salary cap was implemented in the mid-1980s. It ensured that players would receive a good portion of the NBA’s revenue. While that portion has changed over time due to new CBAs and salary cap negotiations, this system remains in place to this day.

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