Last year, the NBA had its highest luxury tax distribution in league history. Seven teams finished over the luxury tax and combined for $481 million in luxury tax payments. The remaining 23 teams who finished below the luxury tax received $10.46 million each from the distribution.
The 2021-22 NBA season was projected to have a record-setting luxury tax season as early as the 2021 offseason. The Golden State Warriors, Brooklyn Nets, Los Angeles Clippers, Milwaukee Bucks, Los Angeles Lakers, Utah Jazz, and Philadelphia 76ers collectively spent $481 million last season, making the distribution nearly three times larger than the previous 2002-03 record season.
Now the 2022-23 season is currently projected to beat last season’s luxury tax distribution by a significant margin. Four more teams are set to join the list with the Boston Celtics, Phoenix Suns, Dallas Mavericks, and Denver Nuggets while the Utah Jazz are set to leave. The 10 teams are currently projected to collectively spend $650 million in luxury tax payments. This would have the remaining 10 non-taxpaying teams collect $16.24 million from the distribution.
The Atlanta Hawks and Portland Trail Blazers are also currently over the luxury tax but they aren’t being counted in this projection. There’s a strong possibility they finish below the luxury tax by the end of the season since they are just slightly over the threshold.
Let’s break things down team by team.
Golden State Warriors
2022-23 Payroll: $188.7 million
2022-23 Luxury Tax Payment: $164.9 million
2022-23 Combined Payroll and Luxury Tax Payment: $353.6 million
The Warriors entered the repeater tax last season and spent $170.3 million in luxury tax payments. Their roster expenses nearly totaled $350 million but it was all worth it when they won their fourth title in eight seasons. Their tolerance of the repeater tax will help extend their window of contention if several teams mentioned later get weeded out from it.
The Warriors are currently projected to have a $165 million luxury tax payment once they follow through on their signing of JaMychal Green. However, they still need to sign at least one more player to what will most likely be a veteran minimum contract. That would raise their luxury tax payment to $176.5 million, and it would be even higher if they sign a 15th player. That figure should serve as a minimum for their luxury tax payment projection as they’re unlikely to reduce payroll by trading any of their core players.
Los Angeles Clippers
2022-23 Payroll: $192 million
2022-23 Luxury Tax Payment: $144.7 million
2022-23 Combined Payroll and Luxury Tax Payment: $336.6 million
The Clippers paid $83.1 million in luxury tax penalties last season, giving them a tax and payroll combination just shy of $250 million. They maximized their spending last year, including utilizing the entire taxpayer mid-level exception and increasing their payroll in their acquisition of Norman Powell and Robert Covington. At one point they were set to pay over $100 million in luxury tax penalties but reduced it significantly by trading Serge Ibaka at the trade deadline.
The Clips are currently projected with a $144.7 million luxury tax payment with 14 players. There is still some room for it to grow since they have one roster spot open they could look to fill. They still haven’t replaced Isaiah Hartenstein with a true backup center, though they could leave that void open since they’ll mostly play lineups consisting of wing-sized players. If they do want a new backup center, they could use their $9.7 million trade exception to acquire one, but that would raise their luxury tax payment significantly.
2022-23 Payroll: $181.4 million
2022-23 Luxury Tax Payment: $90.6 million
2022-23 Combined Payroll and Luxury Tax Payment: $272 million
The Nets finished last season with a $169.3 million payroll and a $97.7 million luxury tax payment, giving them a total of $267 million in roster expenses. The Nets were projected to pay as much as $130 million before the season started, but several cost-cutting moves, including the James Harden trade, helped reduce their luxury tax obligation significantly.
Brooklyn could be the biggest wild card in terms of where they finish in regards to the luxury tax. Their tax payment will reach at least $195 million with the current roster once they reach 14 players, but they could also significantly reduce their payment if they trade Kevin Durant and/or Kyrie Irving. The Nets are currently $32.2 million over the threshold, so they could potentially avoid the tax entirely in a Durant or Irving multi-team deal where a team with cap space like the Spurs or Pacers take on a third team’s bad money.
2022-23 Payroll: $173.8 million
2022-23 Luxury Tax Payment: $58.2 million
2022-23 Combined Payroll and Luxury Tax Payment: $232 million
The Bucks paid a relatively modest $52 million luxury tax payment last season and $210.5 million in total roster expenses. They paid a small tax amount the previous season when they won the championship and are now one year away from the repeater tax. Their core could be at somewhat of an inflection point if the Bucks decide to move around some of their pieces to curb their likely heavy payments going forward.
This year’s Bucks are currently projected with a $58.2 million luxury tax payment with 14 players. Their roster is likely done except for potentially adding a 15th player, which could be done later during the season. It could go down if they look to reduce payroll by trading players like George Hill or Grayson Allen, or it could go higher if they consolidate them for a more expensive player.
2022-23 Payroll: $170.1 million
2022-23 Luxury Tax Payment: $45.2 million
2022-23 Combined Payroll and Luxury Tax Payment: $215.3 million
The Celtics barely avoided the luxury tax last year by finishing just $283,369 below the threshold. They would’ve been taxpayers last year if they won the championship, but now their repeater clock gets delayed by a year. They are currently projected with a $45 million payment with 12 players, but it will reach at least $59 million once they sign two more players to reach the 14-player roster requirement. This would mean their total expenses will exceed $230 million this upcoming season.
2022-23 Payroll: $166.2 million
2022-23 Luxury Tax Payment: $32.6 million
2022-23 Combined Payroll and Luxury Tax Payment: $198.8 million
The Suns are set to be in the luxury tax this season for the first time since 2009-10. After matching Deandre Ayton’s $133 million offer sheet, they are now projected with a $32.6 million tax payment with 14 players. Their payment will likely rise significantly if they are able to acquire Kevin Durant before this year’s trade deadline. Conversely, they could look to avoid the tax if they aren’t looking like a title contender by offloading players such as Jae Crowder and Dario Saric.
Los Angeles Lakers
2022-23 Payroll: $166.1 million
2022-23 Luxury Tax Payment: $32.2 million
2022-23 Combined Payroll and Luxury Tax Payment: $198.3 million
The Lakers went rather deep into the luxury tax last season when they acquired Russell Westbrook. The combination of his salary along with LeBron James and Anthony Davis’ maximum salaries, and the mid-level salaries of Talen Horton-Tucker and Kendrick Nunn, contributed towards the Lakers’ $45.1 million luxury tax payment. They probably would’ve had better results had they sign-and-traded for one of last year’s top free agents while potentially avoiding the tax entirely since they would’ve been hard capped.
As of now, the Lakers are projected with a $32.2 million luxury tax payment, but that could rise or fall depending on what happens with Westbrook. For example, trading him in a deal where he goes to a cap space team like the Pacers or Spurs and get back cheaper players could make the Lakers deeper while potentially avoiding the tax. Alternatively, trading Westbrook in a deal where they receive the maximum 125 percent additional salary they could receive for him could raise their luxury tax penalties by an additional $40 million.
2022-23 Payroll: $164.9 million
2022-23 Luxury Tax Payment: $27.9 million
2022-23 Combined Payroll and Luxury Tax Payment: $192.8 million
The Mavericks are back in the luxury tax for the first time since 2011-12 now that Luka Doncic’s maximum contract is kicking in. They would likely be looking at a $150 million luxury tax payment had they matched Jalen Brunson’s contract with the Knicks. They are currently facing a much smaller $27.9 million penalty, but that could go up or down depending on the direction they take which could depend on how their season is going. If things are going well, they could look to consolidate some players for an upgrade. If they are struggling towards the trade deadline, they could look to get under the tax by moving expiring contracts such as Dwight Powell, Frank Ntilikina, and Theo Pinson.
2022-23 Payroll: $160.8 million
2022-23 Luxury Tax Payment: $17.6 million
2022-23 Combined Payroll and Luxury Tax Payment: $178.4 million
The Nuggets are set to enter the luxury tax for the first time since 2009-10. They significantly curbed their projected payment by trading JaMychal Green for the first-round pick that became Peyton Watson, and trading Will Barton and Monte Morris for Kentavious Caldwell-Pope and Ish Smith. While moving off Green and Morris can be seen as downgrading, it may be more of a sign of confidence in Zeke Nnaji and Bones Hyland being ready to be contributors off the bench.
2022-23 Payroll: $153.6 million
2022-23 Luxury Tax Payment: $5.2 million
2022-23 Combined Payroll and Luxury Tax Payment: $158.8 million
The Sixers finished over the luxury tax for a second consecutive time last season with a $13.9 million penalty. Trading for James Harden increased their payment to that amount and it is possible they could’ve avoided it entirely had that opportunity not been available.
The Sixers are currently facing a small $5.2 million tax payment and they’re capped at paying a maximum of $10.5 million should their payroll reach the $156.98 million apron. Had they not been hard capped and Harden opted into his $47.4 million player option amount, the Sixers could’ve been looking at a $15 million luxury tax payment had they also utilized the entire taxpayer mid-level exception. They could easily get under it by waiving two of their non-guaranteed players or trading a rotation player mid-season like Furkan Korkmaz.
If these luxury tax projections hold up, the NBA will collectively spend $5 billion between payroll, dead money, and luxury tax payments this season.
As mentioned earlier, the Hawks and Trail Blazers are currently over the luxury tax by $1.7 million and $1.5 million, respectively. Both teams can get underneath it by trading a player before the trade deadline and replacing them with a prorated minimum signing.
Some teams that are close to the luxury tax include the Wizards ($357,964 below), Heat ($2 million below), Raptors ($3.3 million below), Pelicans ($3.4 million below), and Bulls ($3.5 million below). Out of all those teams, the Heat and Raptors seem like the most realistic candidates to become taxpayers, especially if they successfully acquire an All-Star like Kevin Durant or Donovan Mitchell.
The 2023-24 luxury tax distribution projection should be even higher than this year’s $650 million projection. This is because the Clippers, Nets, Bucks, Lakers, and Sixers are expected to enter the repeater tax next season. Also, teams like the Hawks, Heat, Knicks, and Pelicans could become taxpayers starting next season. If all these things happen, along with the current 10 taxpaying teams remaining taxpayers, we should see a much higher distribution in 2023-24.
2022-23, Boston Celtics, Brooklyn Nets, Dallas Mavericks, Denver Nuggets, Golden State Warriors, Los Angeles Clippers, Los Angeles Lakers, Luxury Tax, Milwaukee Bucks, NBA, Philadelphia 76ers, Phoenix Suns