The NBA uses a soft salary cap, allowing teams to exceed the $164.961 million 2026-27 cap through exceptions and permitted transactions. The luxury-tax threshold is $200.428 million, followed by the $209.015 million first apron and $221.686 million second apron.
Bird rights, mid-level exceptions, cap holds and trade rules determine how teams can build rosters above the cap. Higher spending brings progressive tax costs, tighter transaction restrictions and potential long-term effects on draft picks.
The NBA uses a soft salary cap. That means the salary cap is not an absolute spending limit. Teams can exceed it through specific exceptions, but the further they spend, the more expensive and restrictive roster building becomes.
For the 2026-27 season, the NBA salary cap is $164.961 million. The luxury-tax threshold is $200.428 million, the first apron is $209.015 million, and the second apron is $221.686 million. The minimum team salary is $148.465 million.
Those figures took effect on 1 July 2026 and were confirmed in the NBA’s official 2026-27 salary-cap announcement. This guide reflects the rules and figures in force as of 5 October 2026.
All official cap figures in this guide are shown in US dollars. These are accounting thresholds written into the NBA system, so converting them into sterling would change with exchange rates and could obscure the actual limits.
If you are new to basketball more generally, World in Sport’s NBA rules guide explains the playing rules, scoring, fouls and shot clock.
2026-27 NBA salary cap thresholds
The salary cap is only the first of several important spending lines.
| Threshold | 2026-27 amount | What it means |
|---|---|---|
| Minimum team salary | $148.465m | The league’s minimum team salary level |
| Salary cap | $164.961m | Teams need cap room or an exception to add salary above this level |
| Luxury-tax level | $200.428m | Teams above this level can owe luxury tax |
| First apron | $209.015m | Triggers or limits several roster-building mechanisms |
| Second apron | $221.686m | Applies the most severe spending and transaction restrictions |
The crucial point is that these lines do different jobs. Crossing the salary cap does not automatically mean paying luxury tax. Crossing the tax level does not automatically mean reaching an apron.
A team can therefore sit well above the salary cap while remaining below the luxury-tax line.
Embed from Getty ImagesHow the NBA salary cap works
The salary cap limits how much Team Salary a franchise can carry unless it has cap room or qualifies for an exception.
That makes the NBA different from a league with a conventional hard cap. A team at the salary-cap limit does not simply have to stop spending.
Instead, the Collective Bargaining Agreement allows several routes above the cap.
The current NBA-NBPA agreement took effect on 1 July 2023 and runs through the 2029-30 season, although both sides have an option to end it after the 2028-29 season.
The full agreement can be accessed through the National Basketball Players Association’s CBA page.
Under the CBA, teams can sign or acquire players above the salary cap when an authorised exception applies. That is the foundation of the NBA’s soft-cap system.
How is the NBA salary cap calculated?
The cap is linked to league basketball-related income.
Under the current CBA, the basic calculation uses projected Basketball Related Income, player benefits and the league’s 30 teams to determine the salary cap.
The minimum team salary, tax level and both apron levels then move at the same rate as the salary cap, subject to adjustments in the agreement.
The CBA also limits annual movement. These system levels cannot fall below their previous year’s amount and cannot rise by more than 10 per cent from one season to the next.
That structure helps explain why new media income and wider league revenue can have a direct effect on future player salaries and spending thresholds.
Why is it called a soft salary cap?
It is a soft cap because being above $164.961 million in 2026-27 does not automatically prevent a team from signing players.
Suppose a team already has $175 million committed. It does not have ordinary cap space because it sits above the salary cap.
However, it could still be allowed to re-sign one of its own players through Bird rights, sign certain players through another exception or make a trade that complies with the CBA.
That is why simply comparing a team’s payroll with the salary-cap figure does not tell you whether the team can make another move.
The relevant question is often which exception or trade mechanism remains available.
What counts against the salary cap?
A team’s cap position is not simply the total salary of the players currently on its active roster.
The CBA uses Team Salary.
That calculation principally includes player contracts and salary still owed to certain waived players. It can also include free-agent amounts, bonuses, draft-pick holds and other accounting charges.
For example, an unsigned first-round draft pick normally carries a cap amount equal to 120 per cent of the applicable rookie scale amount.
Teams can also carry free-agent amounts, commonly known as cap holds. These stop a club from artificially creating large amounts of cap space while retaining unrestricted access to its own free agents.
A team can renounce a free agent to remove that free-agent amount. However, doing so also removes the ability to use the relevant Bird exception for that player.
This is why reports describing a team’s raw payroll and reports describing its available cap space can sometimes appear to conflict.
How the NBA luxury tax works
The luxury tax begins above the salary cap, but it is a separate system.
For 2026-27, the tax line is $200.428 million. A team’s Tax Team Salary is measured for luxury-tax purposes at the end of the regular season.
The tax is progressive. A team does not pay one flat percentage on every dollar above the line.
Instead, spending is divided into tax brackets.
From the 2025-26 season onwards, the standard rates start at $1 in tax for every $1 in the first bracket above the tax threshold. The next bracket costs $1.25 per $1.
The rate then rises sharply. The third bracket costs $3.50 per $1 and the fourth costs $4.75 per $1. Higher brackets continue increasing in 50-cent steps.
The size of each bracket rises with the salary cap. For 2026-27, the bracket amount is approximately $6.064 million under the CBA’s annual adjustment mechanism.
This means spending far above the tax line can become dramatically more expensive than the salary itself.
Embed from Getty ImagesWhat is the NBA repeater tax?
The repeater tax increases the cost for franchises that repeatedly operate above the tax threshold.
Under the current structure, a repeater taxpayer is a team that has been a taxpayer in at least four of five seasons, including the current season.
From 2025-26 onwards, repeater status adds another $2 in tax for every $1 of taxable salary within each bracket.
That can turn a large payroll into an even larger overall bill.
The repeater tax therefore encourages teams to consider not only this season’s spending but also their tax history over several years.
What is the first apron?
The first apron is a roster-building threshold above the luxury-tax line.
For 2026-27, it is $209.015 million.
The first apron is not another tax bracket. Its main purpose is to restrict the methods that high-spending teams can use to improve their squads.
Several transactions are tied to the first apron.
For example, a team cannot make certain moves if the resulting Apron Team Salary would exceed the first apron. These include using the non-taxpayer mid-level exception, using the bi-annual exception and acquiring a player through a sign-and-trade.
Using one of those mechanisms can also hard-cap the team at the first apron for the rest of that salary-cap year.
Teams operating above the first apron also face tighter salary matching in trades. The additional $250,000 allowance available with some traded-player exceptions falls to zero when the post-trade Team Salary exceeds the first apron.
These rules have become an important part of modern free agency, as World in Sport’s look at NBA Free Agency 2026 shows.
What is the second apron?
The second apron sits even higher.
For 2026-27, it is $221.686 million.
Teams can still spend beyond that amount. The second apron is therefore not a universal hard cap.
However, doing so removes several important ways of adding players.
A team above the second apron cannot use mechanisms that would require it to remain below that threshold. That includes using the taxpayer mid-level exception.
Second-apron teams also face significant trade restrictions. Among the most important, they cannot aggregate several outgoing salaries in the normal way to acquire a more expensive player. They cannot send cash to another team in a trade, and other traded-player exception routes are restricted.
The NBA has said the purpose of the second apron is to limit the ability of the highest-spending teams to keep adding outside talent simply because ownership is willing to absorb enormous costs.
Embed from Getty ImagesHow can the second apron affect draft picks?
The second apron can eventually affect a team’s first-round draft position as well as its immediate roster flexibility.
Beginning with the 2024-25 salary-cap year. A team above the second apron at the relevant point at the end of the regular season can have its first-round pick seven drafts later frozen.
A frozen pick cannot be traded.
The consequences can become more severe if the team continues to exceed the second apron. If it finishes above that level in at least two of the following four salary-cap years. The frozen pick moves to the end of the first round and remains unavailable to trade.
This creates a long-term cost that goes beyond tax payments or one summer’s free-agent options.
Is the NBA apron a hard cap?
Not automatically.
This is one of the most common points of confusion.
A team is allowed to have payroll above the first or second apron in some circumstances. Those thresholds do not simply ban further spending in every situation.
Instead, particular transactions can hard-cap a team.
For example, using the non-taxpayer mid-level exception or acquiring a player through a sign-and-trade can impose the first apron as a hard limit.
Other moves, including use of the taxpayer mid-level exception or aggregation of salaries under the relevant traded-player rules, can impose the second apron as the applicable limit.
Once the team triggers that restriction, it cannot exceed the relevant apron for the remainder of the salary-cap year.
That is different from saying every NBA team has a hard cap.
Which NBA salary cap exceptions matter most?
Exceptions are what make the soft-cap system work.
There are several, but a few appear regularly in free agency and roster discussions.
Bird exception
The Bird exception allows a team to re-sign a qualifying free agent for a first-year salary up to his maximum salary even when the team is already over the salary cap.
A player generally qualifies after spending the required three consecutive seasons with the team. Bird status can also survive certain trades and waiver situations.
That is why teams often have much more spending power when retaining their own established players than when trying to sign somebody else’s free agent.
Early Bird exception
Early Bird rights apply after two consecutive qualifying seasons.
The first-year salary can generally reach the greater of 175 per cent of the player’s previous salary or 105 per cent of the previous season’s average player salary.
An Early Bird contract must run for at least two seasons, excluding an option year.
Non-Bird exception
A team’s own free agent who does not qualify for full Bird or Early Bird treatment may still qualify for the Non-Bird exception.
The permitted first-year salary is normally based on 120 per cent of the player’s previous salary, 120 per cent of his applicable minimum salary or, for certain restricted free agents, his qualifying offer.
How the mid-level exceptions work in 2026-27
The mid-level exception is another major tool for teams without conventional cap room.
The NBA has three principal mid-level amounts for 2026-27.
| Exception | 2026-27 amount | Typical use |
|---|---|---|
| Non-taxpayer mid-level exception | $15.044m | For eligible teams operating below the first-apron restrictions |
| Taxpayer mid-level exception | $6.064m | For eligible higher-spending teams that remain within the second-apron rules |
| Room mid-level exception | $9.366m | For teams that have operated with salary-cap room |
A team cannot simply choose whichever version offers the most money.
Its salary position and previous transactions determine which exception remains available. Using particular exceptions can also impose an apron hard cap.
The NBA confirmed all three 2026-27 mid-level amounts when it announced the season’s cap figures.
What other NBA salary cap exceptions exist?
The Bird and mid-level exceptions receive the most attention, but they are not the only routes above the cap.
The CBA also provides mechanisms including the rookie exception, minimum salary exception, disabled player exception, bi-annual exception and several forms of traded-player exception.
The rookie exception allows teams to sign their first-round draft picks according to the rookie salary scale even when they are over the cap.
The minimum salary exception allows eligible minimum contracts without requiring ordinary cap space.
Traded-player exceptions can help teams complete trades while already operating above the salary cap, although their use becomes increasingly restricted around the aprons.
These exceptions do not provide unlimited spending power. Each operates under its own eligibility, contract and apron rules.
Cap space and exceptions are not the same thing
A team with cap space can spend the amount between its Team Salary and the salary cap.
A team without cap space may still have exceptions.
That distinction matters every summer.
A club can therefore be described as having no cap space while still signing players. It may be using Bird rights, a mid-level exception or another permitted mechanism.
Conversely, a team with genuine cap room can lose access to some exceptions available to over-the-cap teams.
The salary cap is therefore less about one number and more about which roster-building route remains open.
Why the apron rules changed NBA team building
The latest CBA makes high spending more complicated.
A wealthy franchise can still retain expensive players and, in some circumstances, continue spending far above the cap.
What has changed is the cost of doing so.
Tax payments rise. Trade flexibility narrows. Certain exceptions disappear. Draft assets can eventually be affected.
That forces front offices to consider the future before handing out another large contract.
Keeping a championship core together may still justify the cost. However, crossing an apron can remove tools that might be needed later to repair or deepen that same roster.
That trade-off is the central idea behind the modern system.
Common NBA salary cap misunderstandings
The salary cap is not the luxury-tax line.
For 2026-27, there is more than $35 million between the $164.961 million salary cap and the $200.428 million tax threshold.
The luxury tax is not the second apron.
A team begins paying tax well before reaching the second apron.
The second apron is not an absolute salary ceiling.
Teams can sit above it, but they face severe restrictions.
Being over the salary cap does not mean a team cannot sign anybody.
Exceptions exist specifically to allow certain transactions above the cap.
Having an owner willing to pay the tax does not solve every problem.
The apron system restricts transactions as well as increasing financial costs.
Frequently asked questions
Can NBA teams spend above the salary cap?
Yes. The NBA uses a soft cap. Teams can exceed the cap when an authorised exception or transaction permits it.
What is the NBA salary cap for 2026-27?
The salary cap is $164.961 million.
What is the 2026-27 luxury-tax threshold?
The tax level is $200.428 million.
What is the first apron in 2026-27?
The first apron is $209.015 million.
What is the second apron in 2026-27?
The second apron is $221.686 million.
Does exceeding the salary cap mean a team pays luxury tax?
No. A team can exceed the salary cap without crossing the separate luxury-tax threshold.
Can a team go above the second apron?
Yes. It is possible to operate above the second apron. However, the CBA then imposes significant restrictions on trades, exceptions and future draft-pick flexibility.
What are Bird rights?
Bird rights allow qualifying teams to exceed the salary cap to re-sign their own free agents. Full Bird eligibility generally requires three consecutive qualifying seasons.
Why do cap holds exist?
Cap holds reserve an amount on a team’s books for certain unsigned players and free agents. They prevent teams from creating artificial cap room while preserving unrestricted rights to re-sign those players.
What fans should remember
The easiest way to understand the NBA salary cap is to treat it as a series of levels rather than one spending limit.
The $164.961 million salary cap is where ordinary cap room ends.
The $200.428 million tax threshold is where luxury-tax consequences begin.
The $209.015 million first apron limits important signing and trading tools.
The $221.686 million second apron creates the toughest restrictions and can eventually affect draft picks.
Between those levels sit Bird rights, mid-level exceptions, cap holds and trade rules that determine what a team can actually do.
That is why NBA roster construction can appear contradictory. A franchise may be millions above the salary cap yet still retain a star. Another may have an extremely wealthy owner but be unable to complete a seemingly simple trade.
The numbers matter, but the available mechanisms matter just as much.
For wider league coverage, explainers and analysis, follow World in Sport’s NBA news and guides hub.
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