Effect on Team Salary

When a Player is paid (via the Payment Arrangement), and how Compensation is treated as Salary for Team Salary purposes, have to be viewed separately.

Below are two examples:

1. Trade Bonus – The entire amount of a Trade Bonus is paid to the player when traded, but the Trade Bonus is applied as Salary proportionately over the length of the Contract for Team Salary purposes.
2. Deferred Compensation – A Team and Player can agree to Deferred Compensation, meaning a percentage of his Base Compensation earned in the current year is paid at a later date. For Team Salary, the amount is applied to the year he earns the Base Compensation rather than when he is paid.

Limitations Generally

No matter what tools the Team and Player want to use to alter the Payment Arrangement, 10% of a Player’s Salary (excluding Likely Bonuses and Trade Bonuses), must be paid in monthly installments agreed upon via the Payment Schedule below.

Payment Schedule

Default Payment Schedule

The default schedule of payments is 24 equal semi-monthly payments beginning with the first payment on November 1st of each year covered by the Contract.

Payments continue on the 1st and 15th of every month until Compensation is paid in full.

Payment Schedule Adjustment

Allowable Terms

The pay schedule can be amended to 12 or 36 equal semi-monthly payments rather than 24, until the Compensation is paid in full.

Contract Limitations

Minimum Contracts and Two-Way Contracts cannot adjust the default payment schedule above.

Note that both these contracts do permit Advances (discussed in more detail below).

Advances

Advances Generally

In addition to adjusting the monthly payment schedule (above), a Player can negotiate receiving a certain amount of his current Season’s Compensation prior to the first payment on November 1st as an Advance.

Amount of Advance

The amount of an Advance depends on if the Contract is a Two-Way Contact, Minimum Contract, or any other Standard Contract.

Standard Contract (Non-Minimum)

The Maximum Advance Amount is the lesser of:

1. 80% of the Amount of the Player’s Compensation that is protected; or
2. 50% of the Player’s Base Compensation for such Season.

However, no more than 25% of the Player’s Base Compensation can be paid prior to the October 1st immediately preceding the first day of the Regular Season.

Minimum Contracts

If protected for lack of skill and injury/illness, then the Minimum Player Salary Advance Limit is the lesser of:

1. 80% of the Player’s Compensation that is protected; or
2. 7.5% of the Player’s Base Compensation for such Season.

The Advance will be deducted in full from the Player’s first installment of Base Compensation on November 1st, and then from the second installment if needed.

Two-Way Contracts

If protected for lack of skill and injury/illness, then the Two-Way Contract Advance Limit equals 50% of the amount of the Player’s Base Compensation the season that is protected.

The Advance shall be deducted in full from the Player’s first installment of Base Compensation on November 1st, and then from the second installment if needed.

Signing Bonus

Signing Bonuses Generally

Definition

A Signing Bonus allows a Player to be paid a portion of the total Compensation in his Contract up front, subject to restrictions.

Note that under the CBA, a Trade Bonus and payments in excess of the EIPPA are also defined as Signing Bonuses.

Signing Bonuses vs. Advances

Note that Signing Bonuses pay a percentage of all Compensation due under the entire Contract up front, while Advances pay a percentage of the Player’s current Season’s Compensation up front.

Amount of Signing Bonus

Original Contract or Extension

Signing Bonus cannot exceed 15% of the Compensation (excluding Incentive Compensation) called for by the Contract.

If it’s an Extension, it can’t exceed 15% of the Extended Term of the Contract.

Offer Sheets

No Offer Sheet may provide for a Signing Bonus exceeding 10% of Compensation (less Incentive Compensation).

Prohibition of Signing Bonus

Renegotiation

A Renegotiated Contract cannot contain a Signing Bonus unless accompanied by an Extension and would otherwise be permitted under the rules for Extensions.

Prohibited Contracts

Rookie Scale Contracts (other than an EIPPA) and Two-Way Contracts do not permit Signing Bonuses.

Extensions and Signing Bonus

A Signing Bonus can’t exceed 15% of the Extended Term of the Contract.

If a Signing Bonus is agreed upon in an Extension, it cannot be payable until the July 1st of the first year of the Extension, unless the Team is below the Salary Cap.

If the Team is below the Salary Cap:

1. Signing is treated as a Renegotiate and Extend;
2. Signing Bonus cannot exceed the Salary Cap for existing years;
3. The first Season of the Extension cannot exceed 140% of the Renegotiated final Season;
4. Paid in two installments:
   • First, paid on a day prior to the Extended Term for an amount equal to the portion of the Signing Bonus allocated to the Salary Cap Years covered under the original term;
   • Second, paid once the Extended Term is in effect, an amount covering the Extended Term.

Salary Proration

The Signing Bonus is paid up-front, but is allocated on a pro rata basis over the length of the Contract.

Visit the Salary page for more detail on Salary calculations.

Maximum Salary Adjustment

See Maximum Salary to learn how Signing Bonuses are adjusted when a Player’s Salary exceeds his applicable Maximum Salary amount.

Suspension – Return of Signing Bonus

If a Player is suspended for an intentional failure/refusal to perform under his Contract, the team is entitled to a return of a portion of the Signing Bonus.

Calculation: The number of games suspended divided by the total number of Regular Season games covered in the Contract (excluding Option Years).

Sign-and-Trades

Any payment made by the Signing Team (i.e. the Team sending the Player) shall be treated as a reimbursement via cash-in-trade of the Receiving Team.

Loans

Loans Generally

A Player and Team can agree that the Team Loan the Player money up to the amount he is guaranteed in Protected Compensation for lack of skill to be repaid over the remaining guaranteed Seasons.

Loan Terms

Amount

No Loan (including any existing loan) can exceed the Player’s Salary for then-current Salary Cap Year that is protected for lack of skill.

Repayment

Any loan must be deducted in equal amounts from the Player’s remaining Protected Compensation over the length of the contract that is fully protected for lack of skill (not including Options/ETOs).

Loan Reduction

If a loan is made at a time of the Season when the Base Compensation is less than what would be owed on the loan, the maximum loan amount for that Season shall be reduced appropriately.

Loan Forgiveness

If a Team forgives any loan, it is considered a Renegotiation and such rules will apply.

Interest Rate/Player Salary

The difference between the interest rate provided in the loan and the Target Rate shall be considered as the Player’s Salary.

• Target Rate – The Prime Rate plus 1% as of the date the loan is agreed upon, but never lower than 7% and never higher than 9%.
  • Prime Rate – The prime rate reported in the “Money Rates” column or any successor column of the Wall Street Journal.

Limitations on Loans

Payment Schedule Requirement

The requirement to be paid 10% of the Season’s Salary in current Base Compensation in accordance with the allowable payment schedule still applies.

Contract Limitations

Two-Way Contracts, Rookie Scale Contracts, and Minimum Contracts are all prohibited from including loans.

Premium Reimbursement

Premium Reimbursements Generally

If a Player procures term life insurance for his benefit, the Team may reimburse him each season for the premiums paid.

Limitation

Amount

The amount of coverage for which the premiums are reimbursed cannot exceed the lesser of:

1. Aggregate unearned Base Compensation (excluding Option Year); and
2. $85 million less Aggregate unearned Base Compensation (excluding Option) Year protected for death.

The reimbursement shall not exceed the cost for 10-year guaranteed term coverage at preferred rates.

Minimum Contracts

Premium reimbursement is not permitted for Minimum Contracts that either (i) signed after the Regular Season or (ii) is not fully protected for lack of skill and injury/illness in first season of Contract.

Premium Reimbursement and Team Salary

The reimbursement of premiums does not count as Salary, and therefore does not contribute toward Team Salary against the Salary Cap.

Deferred Compensation

Deferred Compensation Generally

Definition

The Team and Player can agree that Compensation earned in a particular Season is paid after the May 1st of such Season, and is therefore considered Deferred Compensation subject to the rules below.

Note that the determination of whether Compensation is defined as “deferred” is only based upon the terms of the Contract (i.e. when does the Contract say the Compensation is to be paid), and not when the Compensation is actually funded or secured in any fashion.

Requirements and Limitations

Terms

No Contract can provide for Deferred Compensation exceeding 25% of the Player’s Compensation for such Season.

All Contracts shall specify the Season to which Deferred Compensation is attributable.

Salary Calculation

Deferred Compensation shall be included in a Player’s Salary in the Season it was earned, not in the year it was paid.

Visit the Salary page for more details on Salary calculations.

Contract Limitations

Two-Way Contracts are prohibited from including Deferred Compensation.

The “Over 38” Rule

The “Over 38” Rule is a separate type of Deferred Compensation rule applying to the calculation of a Player’s Salary.

Visit the Salary page for more details on when to apply this rule.

Dead Salary

If a Contract is terminated and includes Compensation Protection, then the Compensation remains owed to the Player as Dead Salary. There is an automatic Payment Schedule for Dead Salary discussed below called the Mandatory Stretch Provision.

$500k or Less Owed

If $500,000 or less is owed in Protected Compensation, then the Player will be paid in accordance with the Payment Schedule already set forth in the Contract.

Each installment will equal the amount of Base Compensation that was due per pay period for the applicable Season immediately before termination until the aggregate amount due is paid in full.

More than $500k Owed

Current Season Paid per Terms of Contract

The Protected Compensation for the current Season (September 1st through June 30th) is paid in the same manner as above.

Remaining Seasons Paid in Equal Semi-Monthly Installments

The remaining Base Compensation is paid in equal amounts over the remaining Seasons (including any Player Option Year), plus one. If the waiver is made between September 1 and June 30, then the current Season is not included in the number of remaining Seasons.

The rescheduled payments are then paid in equal semi-monthly installments per the default payment schedule in the UPC.

Limitations

Below are the limitations for both Team and Player Options:

1. Can only be for 1 Year;
2. Salary (less Incentive Compensation), Likely Bonuses and Unlikely Bonuses cannot be less than the prior year;
3. All other terms and conditions (including Compensation Protection) must remain unchanged from the prior year, other than the Player’s Payment Schedule;
4. No Conditions – The Option must be a fixed right and not exercised/declined based upon a condition.

Exercise Period

Subject to the exceptions below, an Option must be exercised by 5:00 P.M. E.T. on the June 29th prior to the Season the Option covers.

• RFA’s – If (i) it is a Player Option and (ii) the Player would become an RFA if declined, then the Option must be exercised prior to June 25th;
• Rookie Scale Contracts – Rookie Scale Team Options must be exercised by October 31st the Season prior to the year the Option takes place.

Player Options and Compensation Protection – If Compensation Protection would be extinguished if the Contract is terminated, then the Player has to wait until the last game of the Season prior to the Option Year to exercise his Player Option.

Options and Compensation Protection

To see how Compensation Protection is treated when an Option is declined, visit the Compensation Protection page.

Limitations

The ETO must only shorten the Contract one Year, and must shorten the 4th Season.

If a Veteran Extension is signed, the ETO must be eliminated (since it can only terminate the 4th Season).

If an ETO is exercised, then the Player is no longer eligible for an Extension.

If a Rookie Scale Extension is signed, an ETO can be added but can only take effect at the end of the 4th season of the extended term of the Contract.

The ETO must be a fixed right and not exercised/declined based upon a condition.

ETO Limitation Period

ETO’s must be exercised by 5:00 P.M. ET on June 29th prior to the Option Year.

Minimum Salary

Minimum Salary Generally

The CBA sets Minimum Salary Players can be paid. The amount is based on their Years of Service (YOS) in the League (other than Two-Way Contracts, which have a set Salary irrespective of YOS).

Player’s Applicable Minimum Salary

A Player’s “applicable Minimum Salary” is his Minimum Salary based the year of signing and his YOS at that time.

As an example, below is the Minimum Salary for the 2025-26 Season. If a Player were signing a Minimum Contract and had 2 YOS, his first year Salary is $2,296,274. Keep in mind that as you move through the life of the Contract, you move diagonally to find the applicable Minimum Salary for years 2 through 5 as applicable.

See the highlighted portion below for a Player with 2 YOS signing his Contract in 2025-26.

Ten-Day and Rest-of-Season Contracts pay the Minimum Salary, but prorated over the number of days of the Contract.

The Contract intended to provide Minimum Salary will include an Exhibit 1A specifically stating that Compensation will equal Minimum Salary with no bonuses of any kind.

Payment Arrangements

Bonuses

Exhibit 1A expressly states there are no bonuses of any kind in a Minimum Contract. The exceptions include:

1. Trade Bonuses;
2. Exhibit 10 Bonuses;
3. EIPPA (explained below).

While the EIPPA is a Signing Bonus, it is permitted in a Minimum Contract, provided that the Salary still does not exceed Minimum Salary and the Contract makes clear its yearly allocation for each Season.

Advances

Permitted if the Minimum Salary is partially or fully protected for lack of skill/injury/illness.

Can be advanced up to the lesser of (i) 80% of the Compensation Protection amount or (ii) 7.5% of the Base Compensation.

Advance to be paid prior to November 1st and deducted from the first installment of Base Compensation due (and deducted from future installements if necessary)

Amending to Minimum Salary

A Contract is automatically amended on July 1st to ensure a Player’s Salary is not less than the applicable Minimum Salary.

Maximum Salary

Maximum Salary Generally

Regardless of any other rule allowing a Player to sign for a certain amount, the amount will always be adjusted down to his applicable Maximum Salary below.

A Player’s Maximum Salary depends upon his YOS and whether he reached the Higher Max Criteria. If he hits the Higher Max Criteria he jumps to the next percentage bracket, often called a “Supermax.”

Note that Maximum Salary refers to Salary plus Unikely Bonuses

Higher Max Criteria

Below are the conditions that can be met to reach the Higher Max Criteria:

1. The Player either makes All-NBA or is the DPOY in (i) the immediately preceding season or (ii) in 2 of the 3 prior seasons; or
2. Named MVP in 1 of the prior 3 seasons.

Keep in mind, to receive the above League Honors, a Player must reach Minimum Game Threshold. If not, the Player is excluded from receiving the League Honor.

Maximum Amount

Below is the Maximum Salary + Unlikely Bonuses a Player can receive based upon his YOS.

Amending an Extension with Maximum Salary

Oftentimes a Contract is signed at a time when the Player’s Maximum Salary in the future is not known, and has to be adjusted.

The Player’s Salary will be adjusted on July 1st to equal the Maximum Salary. The following categories will be reduced in the following order until the Maximum Salary is reached:

1. Signing Bonus – The Signing Bonus will be reduced first. Signing Bonus for the future seasons is reduced on a pro rata basis.
2. Incentive Compensation – Any Incentive Compensation will be reduced second. Future seasons will be amended to abide by maximum increase/decrease limitations.
3. Base Compensation – Base Compensation will be reduced last. Future seasons will be amended to abide by maximum increase/decrease limitations.

Increase and Decrease Limitations

Percentage Limitation

Generally

Below are the limitations based upon the Transactions executed:

The 8% increase/decrease is not available if a Team uses another Exception to sign a Player even though Full or Early Bird Rights are available.

Calculation

The maximum increase/decrease is a fixed amount determined by calculating the percentage of Year 1. It is not compounded over future years.

If an Extension is signed stating that Year 1 Salary is based upon a percentage of the Salary Cap, then the annual increase/decrease can also state the percentage rather than a specific dollar amount. The Contract will then be amended to the fixed amount on July 1st of the extended term when the amount is known.

Limit Each Compensation Type

The increase/decrease limitations are broken into the following Compensation types:

1. Salary, exclusing Incentive Compensation;
2. Regular Salary;
3. Incentive Compensation – Each individual bonus may only be increased/decreased by the applicable limit;
   • The criteria for earnning any Bonus must also be unchanged from year to year.

Decreases Prohibited in Option Years

If there is an Option Year in a Contract, the Player’s Salary (less Incentive Compensation), Likely Bonuses and Unlikely Bonuses cannot be less than the prior year.

Contract Length

The minimum and maximum Contract length will depend on the Transaction type and the Exception used, if applicable.

Below is a full list of all CBA rules that require a minimum of maximum term length.

If one of the rules below do not apply, then the maximum term length is 4 Seasons.

Note for Extensions, count 1 full Season for the year the Contract is being signed, even if the Extension is signed on the last day of the Salary Cap Year.

No Future Contracts

Every Contract must cover at least the then-current (or upcoming Season), and a multi-year Contract cannot skip Seasons.

No Decrease in Salary

A Team and Player may not negotiate a decrease in Salary or Incentive Compensation covered by an existing Contract.

However, Compensation Protection may be reduced (via a Buyout) and an Option Year can be declined and the Salary can then be reduced in the same Season of the declined Option Year.

Triggering UFA Status

Finishing a Contract

If a Player is in the final Season of his Contract and he is not subject to Restricted Free Agency, then he becomes a UFA as of July 1st following his final Season.

Other UFA Methods

Other than finishing an existing Contract, a Player may become a UFA in other ways, including:

1. A Prior Team’s right to match (“ROFR Rights”) are relinquished during Restricted Free Agency;
2. Player clears Waivers;
3. Draft Rights are relinquished;
4. Player is undrafted.

Key Dates

Signing Dates

While a Player becomes a UFA on July 1st, he cannot sign a Contract until after the July Moratorium.

Negotiation Dates

A UFA can negotiate with his Prior Team (if he finished the Season on the Team’s Roster) after the NBA Finals.  

A UFA can negotiate with any other Team beginning on 6:00 P.M. Eastern on June 30th before he becomes a UFA on July 1st.  

Methods of Signing a UFA

Team’s Capable of Signing UFA

While a UFA is free to sign with any Team, each Team is limited by its current financial situation.

Teams can sign a UFA using the following methods:

1. Cap Space;
2. Salary Cap Exception available to Sign UFA:
   • NTMLE ($14,104,000);
   • TMLE ($5,685,000);
   • Room MLE ($8,781,000);
   • BAE ($5,134,000);
   • Minimum Exception ($1,272,870 to $3,624,153);
3. Sign-and-Trade;
4. Bird Rights for Prior Team only (if applicable).

If a Player is valued above the NTMLE amount, then his only options are signing with to a Team with sufficient Cap Space or signing with his Prior Team if they have Bird Rights either to stay with his Prior Team or via Sign-and-Trade to a new Team.

Contract Limitations to UFA

A UFA is also limited as to the Contract terms he can sign with any Team.

Those limitations are contained within the rules for each Contract Type, as well as general Contract Limitations applied universally for Salary, Term Length and increase/decrease limitations.

The RFA Process

Step 1 – Qualifying Offer

If the Player is subject to Restricted Free Agency, then the Team he last played for (Prior Team), has to make a Qualifying Offer (QO) to retain its Right of First Refusal (ROFR or Matching) rights to the Player.

Step 2 – RFA makes a decision

1. Sign QO: Play under the terms of the 1-Year QO;
2. New Deal with Prior Team: Sign an entirely new agreement with Prior Team;
3. Sign Offer Sheet: Sign an Offer Sheet with another Team (Offering Team), giving the Prior Team the right to match.

Step 3 – Prior Team Makes a Decision (only if Offer Sheet signed)

If RFA signs an Offer Sheet, the Prior Team has to decide whether to Match the Principal Terms of the Offer Sheet or let him sign with the Offering Team.

First Round Picks

Rookie Scale Contracts

If a Player is a First Round Pick, then the Player must sign a Rookie Scale Contract.

Term Length

Every Rookie Scale Contract is a 4-Year Contract with Years 1 and 2 guaranteed and two Team Options for Years 3 and 4 called Rookie Scale Team Options.

The Rookie Scale Team Option has to be exercised by October 31st the Season prior to the applicable Year.

If both Rookie Scale Team Options are exercised, the Player is an RFA entering the offseason of his 5th Season (unless he signs a Rookie Scale Extension prior to his 4th Regular Season).

If either Option is not exercised, he becomes a UFA. His Prior Team can still sign him over the Salary Cap. His starting Salary is limited to the Rookie Scale Team Option that was declined.

Salary

The “Rookie Scale Amount”

The Player’s Salary must be within a fixed range based upon where the Player was selected in the Draft (hence the term “Rookie Scale”). This is called the Player’s applicable Rookie Scale Amount.

You can find the Rookie Scale Salaries here.

Signing a Rookie Scale Contract is a Salary Cap Exception, allowing Teams to sign their First Round Picks over the Salary Cap.

The Player is to earn a minimum of 80% Base Compensation of the Rookie Scale Amount, and can negotiate Salary and Unlikely Bonuses up to 120%.

It is common practice for Teams to pay the Player the 120% unless there is a specific reason for doing otherwise.

The Rookie Scale

The Rookie Scale is a baseline amount set initially with the 2023-24 Season and increases in line with the Salary Cap each Season.

The Baseline Rookie Scale Amount is found in Exhibit B-1 of the CBA.

You can find the Rookie Scale Salaries here.

Events Changing Rookie Scale Amount

Forfeiture of Draft Picks

If a Team is required to forfeit its Draft Pick, then the Salary Scale is adjusted for the applicable Draft to remove the 15th pick’s Rookie Scale Amount. If multiple Draft Picks are forfeited, then the 16th pick is removed, followed by the 14th, continuing in that order.

Prorating Salary if Signed During Season

If a Player does not sign his Rookie Scale Contract until January 10th, his Salary will be prorated beginning January 10th, and will be reduced on a prorated daily amount (Rookie Scale Salary ÷ Regular Season Days = Daily Amount to Reduce).

Trade Bonus

Similar to Maximum Salary, if a Trade Bonus is triggered by a Rookie Scale Contract causing the Salary/Unlikely Bonuses to exceed 120%, then it’s reduced down to 120%.

Signing During Regular Season // Non-NBA Contract

If a Player has a Non-NBA Contract, he can sign his Rookie Scale Contract from February 1st through June 30th to be effective beginning the following Season.

The Player is to receive the Rookie Scale Amount for the Season when the Contract begins. The Contract will state the percentage of the Salary Cap the Draft Pick is to receive, rather than a fixed amount.

Note that a Player can sign his Rookie Scale Contract while still under a non-NBA Contract, provided it expires prior to the effective date of the Rookie Scale Contract.

Later-Signed First Round Picks

The applicable Rookie Scale Amount is the season in which the Rookie Scale Contract takes effect, and not the Season the Player is Drafted.

However, if a First Round Pick does not sign a Contract in the first three Seasons following his Draft, then the Team with Draft Rights can sign him to either of the following:

1. Rookie Scale Contract for the Season signed ; or
2. Base Compensation greater than 120% of the Rookie Scale Amount provided the Team has Room, and the Contract is for a minimum of 3 Seasons (excluding Options).

Loss of Draft Rights

If a Team loses the Draft Rights to the First Round Pick, then the Player will become a Rookie Free Agent free to sign with any Team.

However, the Team with Draft Rights is prohibited from signing the Player until after he signed a Player Contract with another Team.

Additional Terms

Payments Arrangements

The following rules apply regarding Payment Arrangements and Rookie Scale Contracts:

1. Signing Bonus – Not permitted (other than EIPPA);
2. Loan – Not permitted;
3. Payment Schedule – Can agree to a more favorable Payment Schedule.

Compensation Protection

Must provide for Compensation Protection for lack of skill/injury/illness of 80% of the Rookie Scale Amount in Years 1 and 2.

The Team and Player can negotiate any other conditions and limitations on Compensation Protection so long as Years 1 and 2 are protected.

Changing Terms Year-to-Year

The terms and conditions shall be unchanged from Year 3 and Year 4 other than Payment Schedule, and Salary/Bonuses shall increase by the applicable percentage in the Rookie Salary Scale.

Second Round Picks

Teams that draft a Player in the Second Round have the option (not a requirement) to sign him over the Salary Cap using the Second Round Pick Exception.

However, the Team is not restrained to the Exception and its terms, and can sign a Second Round Pick using any method of signing a Player, similar to a UFA.

In practice, Second Round picks will typically be offered terms within the Second Round Pick Exception, the Minimum Exception, or a Two-Way Contract. Two-Way Contracts are more common the later into the Second Round a Player is drafted

Undrafted Rookie

If a Player was eligibile for the Draft and went undrafted, he becomes a Rookie Free Agent.

A Rookie Free Agent can sign with any Team immediately upon the conclusion of the Draft. Oftentimes, Players will ask not to be drafted toward the end of the Second Round so they become Rookie Free Agents and can freely sign with their desired Team.

There is no separate Exception to sign a Rookie Free Agent. The Team must use Cap Space or another available Exception to sign the Player, unless signing him to a Two-Way Contract.

Trade Restrictions

The Draft Rights to a Player can be included in a Trade immediately when the Player is drafted. However, a Player that was drafted cannot be included in a Trade for 30 days after signing his Contract.

This does not include undrafted Rookie Free Agents, who fall into the rules for signing as any other Free Agent signing, which is the later of three months or December 15th.

Rookie Scale Extensions

Player Eligibility

Rookie Scale Extensions are only available to (i) Players currently playing under a Rookie Scale Contract and (ii) both Team Options have been exercised.

When Extension Can be Signed

A Rookie Scale Extension can only be signed during the Second Option Year of the Rookie Scale Contract, from 12:01 P.M. ET on the last day of the Moratorium Period until 6:00 P.M. ET on the day prior to the start of the Regular Season.

Players that do not sign a Rookie Scale Extension by the start of the Regular Season will become Restricted Free Agents in the offseason.

Salary

Maximum Amount Permitted

The Salary can be any amount up to his Maximum Salary, which is 25% of the Salary Cap, unless he satisfies the Higher Maximum Criteria. If he hits the Higher Maximum Criteria, he can be offered up to 30% of the Salary Cap.

Conditional Amount for Higher Max Criteria

If the Player hasn’t hit the Higher Max Criteria at the time of signing his Rookie Scale Extension, the increase can be conditional on him achieving the Higher Max Criteria in Year 4 of his Contract.

The Conditional Language can jump from 25% to 30% simply for achieving Higher Max Criteria or have levels based upon what is achieved.

Length

Maximum

A Rookie Scale Extension can cover up to six Seasons from the date the Extension is signed (i.e. including the current Season and any Option Year).

Minimum

If a Rookie Scale Extension provides for Salary over 25% then the Rookie Scale Extension must be for a minimum of five Seasons (including the current Season and any Option Year).

Raises

Increases and decreases of up to 8% are permitted.

If starting Salary of the Rookie Scale Extension is based on percentage of Salary Cap, then the annual increase/decrease can be identified as a percentage of the starting Salary.

Veteran Extensions

Eligibility

Contract Length Determines Eligibility

Whether a Player is Extension eligible typically depends on the length of his current Contract and when it was signed.

*Renegotiation Exception – If Contract was a Renegotiation increasing Player’s Salary by 10% or more, then eligibility is not until the third anniversary of signing.

“Full Bird” Requirement – A Player can only sign an Extension if at the end of the Contract he will qualify for Full Bird Rights.

Determining Signing Date and Years

If an Extension/Renegotiation is signed on October 2nd through the last day before the Regular Season, it’s treated as being signed on October 1st for Extension eligibility purposes.

Always include remaining Seasons of the Original Contract when calculating the amount of years in an Extension.

If the new Extension is extending a previously-signed Extension, then the number of Seasons used to calculate eligibility is the number of Seasons included in the most recent Extension.

When Extension Can be Signed

One Season Remaining

If only one Season remains on the Contract, the Extension can be signed anytime during the Regular Season.

• Exception – A Designated Veteran Extension must still be signed before the start of the Regular Season.

More than One Season Remaining

If more than one Season remains on the current Contract, then Veteran Extensions can only be signed between July 6th at 12:01 P.M. up to the date before the Regular Season begins.

Compensation

A Player eligible for a Veteran Extension is typically limited to an increase in Compensation based upon the last Season of the existing Contract, subject to few exceptions.

Compensation is then split into different categories when calculating the increase limitation: Salary and Performance Bonuses.

The General 140% Increase

Salary

Unless one of the exceptions to the rule applies below, a Player’s starting salary in Year 1 of his extended term can be the greater of (i) 140% of the Regular Salary in the last year of his Contract, or (ii) 140% of the EAPS for the Salary Cap Year in which the Extension is signed (or 140% EAPS less Incentive Compensation if included in Extension).

Incentive Compensation

If the last Season of the original Contract included Incentive Compensation, then the first Season of the Extension can include 140% of the Likely and Unlikely Bonuses, respectively, in the last Salary Cap Year covered by the original term (see below regarding Non-Performance Bonuses).

Adjustment for Certain Bonuses

When determining the Player’s maximum allowable Salary in a Veteran Extension, you add (i) bonuses for physical/academic achievement, and (ii) bonuses related to promotional appearances to Regular Salary, and exclude them from Incentive Compensation.

Maximum Salary Limitation

If 140% increase exceeds the Player’s Maximum Salary, he will be reduced to his applicable Maximum Salary.

Designated Veteran Extension (the “Supermax”)

If a Player is eligible for the Supermax, then he can avoid the 140% limitation and sign for 30% to 35% of the Salary Cap.

Supermax Eligibility

A Player is eligible for the Supermax if the following elements are met:

1. Completed 7 or 8 YOS at time of signing Extension;
2. Has 1 or 2 Seasons remaining on Contract (including Option Year);
3. Remains on his first Team or was traded during his first 4 Seasons;
4. Has achieved the Higher Max Criteria at the time of signing his Extension.

No Conditional Language for Supermax

Unlike Rookie Scale Extensions, Veteran Extensions don’t allow conditional language for a Player to reach the Higher Maximum Criteria after the Extension is signed like the Rookie Scale Extension does.

The Player, like Jaylen Brown above, must have reached the Higher Maximum Criteria prior to the signing of the Extension

Trade Restriction of Supermax Contract

Player cannot be traded for 1 Year after signing Supermax.

The Ten-Year Veteran Exception

If (i) a Player played for his current Team for 10+ Seasons and (ii) whose Salary declined in the final Season of his Contract, then his maximum allowable Salary can be the following:

The greater of (i) 107.5% of the average of the Regular Salaries for each Salary Cap Year covered by the original Contract beginning when it was entered into or extended, or (ii) 107.5% of the Regular Salary in the last Salary Cap Year covered by his original Contract.

If this amount is less than the 140% rule above, then the 140% rule can be applied instead.

Length

A Veteran Extension other than a Supermax must be between 2 and 5 Seasons from the date it is signed.

Supermax Contracts must be for six Seasons from the date it’s signed.

Raises

Any Extension can be for up to 8% annual increases/decreases.

Trades Limiting Extension Terms

Extend-and-Trade

The above Salary, length and raises are not allowed when signing an Extension as part of a trade (i.e. an Extend-and-Trade).

Extend-and-Trade terms are limited to 120% of Prior Salary, 4 Seasons in length and 5% raises.

Visit the Extend-and-Trade page for full details.

The Six-Month Prohibition

To prevent the possibility of extending a Player immediately before or after a Trade to workaround the Extend-and-Trade limitations, the following trade restrictions were put in place:

1. If a Player is acquired via Trade, the Team cannot sign the Player for more than 4 Seasons and 120% of his Prior Salary for six months.
2. And vice-versa, if a Player signs an Extension for more than 4 Seasons, 120% increase in Prior Salary, or 5% raises, then he cannot be traded for six months.

Options in Original Contract

Team and Player Options

An already existing Option can be exercised or declined when effectuating an Extension, provided the eligibility requirements above are still met.

To do so, the Contract will be amended to simultaneously provide for the exercising or non-exercising of the Option along with the execution of the Extension.

If the Option is declined as part of the Extension, then the Extension must cover a minimum of two Seasons, excluding Option Years.

Early Termination Options (ETO’s)

A Contract that has been shortened by exercising an ETO cannot be extended.

If the Extension is signed prior to exercising the ETO, then it must be eliminated.

Signing Bonuses and Trade Bonuses

Signing Bonuses

An Extension can include a Signing Bonus, but the date when it becomes payable is limited. Visit the Payment Arrangements page for details.

Trade Bonuses and Extensions

Trade Bonuses can be added, removed or adjusted in an Extension. Visit the Trade Bonus page for details.

Extend-and-Trade

See Extend-and-Trade Rules here.

Eligibility

Dates of Eligibility

A Player’s Contract cannot be renegotiated from March 1st through June 30th.

Player Eligibility

Only Player Contracts covering 4+ Seasons may be renegotiated.

Player becomes eligible on the third anniversary of the signing of the Contract, with the following exceptions:

1. Extension – If the Original Contract was extended, then he is eligible on the third anniversary of the signing of the Extension.
2. Prior Renegotiation – If the Original Contract was already renegotiated with an increase of 5% or more of Salary/Incentive Compensation, then he is eligible on the third anniversary of the Renegotiation.
3. Trade Bonus Amended – If a Trade Bonus was waived/reduced, then the Player can’t renegotiate until six months from the Trade (or the dates above, if later).

Contract Terms

Compensation

Increase in Compensation

The Renegotiation can include an increase in Regular Salary and Performance Bonuses for the then-current Salary Cap Year.

The Renegotiation may provide for additonal Performance Bonuses that were not in the Original Contract.

The amount of Regular Salary and Performance Bonuses may not exceed the Team’s Cap Space at the time of Renegotiation.

Decrease in Compensation

A Renegotiation cannot decrease a Player’s Salary/Incentive Compensation.

Renegotiations and Maximum Salary

The Maximum Salary rules apply, but a Player may not qualify for an increase in percentage of the Salary Cap based upon hitting the Higher Max Criteria.

Annual Raises

Each category that is increased (Regular Salary, Likely Bonuses or Unlikely Bonuses), must be increased for each remaining Season in the Contract.

The annual raises are limited to 8% for each category.

Signing Bonus Prohibited

Signing Bonuses are prohited as part of a Renegotiation unless part of a Renegotiation-and-Extend, discussed below.

Renegotiate-and-Extend

Generally

If the Player is eligible for both a Renegotiation and an Extension, then both can be signed simultaneously as part of a Renegotiate-and-Extend.

Decrease in Extended Term

Regular Salary

Salary less Incentive Compensation in the first year can decrease by up to 40% of the Regular Salary the the last year of the Original Contract (as renegotiated).

Incentive Compensation

If there is Incentive Compensation in the Original Contract and it was renegotiated, then Likely Bonuses and Unlikley Bonuses can each decrease by 40% in the first year of the extended term.

Trade Restrictions

There is not a Renegotiate-and-Trade rule in the CBA.

A Player who signs a Renegotiation cannot be traded for six months.

The Waiver Process

Below is a summary of how the Waiver process works:

1. Team requests Waivers for a Player;
2. Player is on Waivers for 48 hours, when another Team can claim his Contract;
3. Player is either claimed (and Contract is assigned to the Claiming Team) or the Contract is terminated and he becomes a UFA;
4. If the Player clears waivers (i.e. no one claims him) then he is due any amount of Protected Compensation remaining on his Contract, unless a different amount was agreed to in a Buyout.

Waiver Requests and Claims

Waiver Requests

A Waiver Request cannot be withdrawn during the 48-hour Waiver process. He is either claimed or the Contract is terminated.

Both the Roster Spot and the Non-Guaranteed Salary are freed up immediately upon request . This allows Teams to effectuate trades without having to wait the 48 hours.

July Moratorium does not prohibit Requests or Claims.

10-Day Contracts do not go through the Waiver Process and are terminated immediately.

Playoff Eligibility and Waiver

A Player must have been requested to be waived by March 1st to remain eligible for the Playoffs in the current Season when signed by another Team.

• Exception – Player is acquired by a Team whose Active List was reduced to 8 Players due to injury/illness.

Waiver Claim

Requirements

The Team must have an open Roster Spot and Room to sign the Player.

The Team must pay a fee to the League when making a claim.

Waiver Order

If multiple Teams claim a Player, the Team with the worst record wins the claim.

In the offseason and through November 30th of the Regular Season, use the prior Season’s record.

If Teams have an equal winning percentage, then the tiebreaker goes to the Team with the worst winning percentage among the tied Teams in regular season games played. If still tied, a coin toss determines the tiebreaker.

Effect of Claim

The Claiming Team assumes the entire Contract, similar to a Trade.

The Claiming Team cannot Trade the Player for 30 days during the season, or the first 30 days of next season if claimed in the offseason.

Partial Waivers

Partial Waivers-where a Team will claim a Player but only agree to pay a certain portion of his guaranteed Salary-is only permitted as part of the Fitness-to-Play Panel process.

Re-Signing After Waivers

If a Player is Traded and subsequently waived, the Sending Team cannot sign or claim the Player until the earlier of (i) 1 year following the date all conditions of the Trade were satisfied and (ii) July 1st following the last Season of the waived Contract.

If a Player and Team agree to a Buyout, then the Team cannot re-sign the Player until the later of (i) 1 year after the Contract was terminated and (ii) July 1st following the last Season of the Contract.

Dead Salary

Calculating Dead Salary

Base Compensation

If he clears waivers, the Player is still owed his Protected Compensation for the remainder of the Contract (subject to any Buyout agreed to, discussed below).

Unearned/unprotected Base Compensation and any Bonuses are not due to the Player.

The Universal “Cutdown” Date

Any Contract that is terminated for “lack of skill” from January 10th to the end of the Season is entitled to his full Base Compensation for the Season.

Therefore, if a Team seeks to terminate the Contract prior to the Salary being fully guaranteed for the Season, the Team must allow the Player to clear waivers prior to January 10th (i.e. he must be cut on January 8th).

Options and ETO’s

1. ETO’s – Counted as guaranteed salary;
2. Team Options – Not owed to the Player if cut prior to exercising Team Option;
3. Player Options – Depends on language in the Contract. See Compensation Protection page for details.

Salary Calculation During Season

If the Player is waived during the Regular Season (before the universal guarantee date of January 10th), his Current Season’s salary is calculated as follows:

Base Compensation and the Minimum Salary Subsidy

Note that Base Compensation does not factor in the subsidization for a 1-Year Minimum Salary Player. Use the Minimum Salary applicable for the Player’s YOS. In other words, a Player with 6 YOS who signs a 1-Year Minimum Contract will be subsidized to the 2 YOS Minimum Salary for Cap/Apron/Tax purposes. However, if he is waived you use the full amount of his Minimum Salary.

Stretching Salary

Payment vs. Effect on Team Salary

Stretching Salary means spreading the Dead Salary across twice the remaining Seasons, plus one more Season.

The actual Payment Arrangement of the Dead Salary is automatically stretched.

For Team Salary purposes, the Team can elect whether to stretch the Dead Salary, or to keep the Dead Salary as it was originally allocated in the Contract.

Calculating Stretched Dead Salary

Election from July 1st to August 31st

Dead Salary stretched equally for twice the amount of Remaining Seasons, plus one (including the Current Season).

Election from September 1 through June 30th

Any Dead Salary for the Current Season shall remain unchanged. Any Dead Salary for Future Seasons will be stretched equally for twice the amount of Remaining Seasons, plus one (not including the Current Season).

Delayed Stretch

The Team can elect to stretch the Dead Salary at any point through the term of the waived Contract until September 1st of the last Season.

Limitation on Stretch Election

A Team’s Stretched Salary can only make up 15% of the Salary Cap for a particular Season.

Buyout

General Rule

A Buyout is a method of the Team and Player agreeing to reduce the amount of the Player’s Protected Compensation in exchange for his release.

The Buyout agreement can include language limiting or eliminating the Team’s right to Set-Off.

Buyouts and January 10th

On January 10th all non-guaranteed Base Compensation for the Season is fully guaranteed, so there is nothing to Buyout (unless the Player has future guaranteed Seasons). However, a Player can still agree to reduce the guaranteed Salary if he wants out of his current Contract to sign with a new Team.

Allocation of Buyout

If the Player and Team agreed on a Buyout (discussed below), then the total amount that was reduced will be reallocated pro rata over then-current and remaining Salary Cap Years based on the remaining Protected Compensation in each Salary Cap Year.

This math is without any Stretch election, discussed above.

Set-Off

If a Player (i) is waived by one Team (Prior Team), (ii) is owed Dead Salary by his Prior Team, and (iii) signs a new Contract with a new Team (Subsequent Team) during the term of the original Contract, then the Prior Team may be entitled to a Set-Off, reducing the amount owed in Dead Salary to the Player.

The Set-Off Amount is calculated using the amount of Compensation the Player earns in his Subsequent Contract and adjusting using the calculation below (the Prior Team can require the Player provide evidence of the Compensation earned in his Subsequent Contract).

Calculating Set-Off Amount

Below are the steps for calculating the Set-Off Amount:

Deferred Compensation Adjustment

If the Dead Salary is unearned Deferred Compensation covering the term of the original Contract, then the Set-Off Amount is discounted by the Prime Rate at the time the agreement for Deferred Compensation was made.

Allocation of Set-Off

Once the Set-Off Amount is calculated, is it allocated on an equal basis over the Mandatory Stretch Provision.

Effect on Team Salary

The Set-Off Amount will operate in line with the Team’s election to stretch Dead Salary.

If the Dead Salary is stretched, then the Dead Salary is reduced the same as the Set-Off Payments above.

If the Dead Salary is not stretched, then the Set-Off Amount will apply to the applicable Salary Cap Year.

Waiver of Set-Off Right

The Team can waive or reduce its right to a Set-Off as part of a Buyout agreement (discussed above).

Non-NBA Team and Set-Off Rights

The right to Set-Off also applies when the Second Team is a Non-NBA Team.

Compensation can include any non-cash compensation provided to a Player as identified within the CBA.

If the Player is paid by the Non-NBA Team on a net-of-tax basis, then his Compensation for the year is to be divided by 0.65 before beginning Step 1 above, unless the Player shows that taxes were not paid or exceed the actual amount paid.

A Team is not required to enforce its Set-Off right against a Player who signed with a non-NBA Team.

Unrecouped Set-Offs

If the Prior Team cannot deduct enough from ongoing payments to satisfy the Set-Off Amount, then the Prior Team can direct the Subsequent Team to withhold payment and pay the unrecouped amount to the Prior Team.

If there is still not enough to satisfy the Set-Off Amount, then the League and NBPA will work out an agreement.

Multiple Set-Off Rights

If the Player was waived multiple times resulting in more than one Team with Set-Off rights during a Salary Cap Year, then the initial Prior Team will take priority in recouping the Set-Off Amount, followed by the following Teams with Set-Off rights in succession.

Generally

This page addresses general Trade rules that may apply when executing a Trade. There are separate pages that address the following, more complex Trade topics:

1. Traded Player Exceptions;
2. Trade Salary (Trade Math);
3. Trade Bonus;
4. Sign-and-Trade / Extend-and-Trade.

Roster Spot Requirement

If a Team is acquiring more Players than it is sending out, then the Team must have an open Roster Spot to absorb the additional Player(s) prior to executing the Trade.

Note that a Team can request a Player to be waived and the roster spot will be opened before he clears waivers (they don’t have to wait).

Tradeable Assets

It’s important to note what counts as an “asset” in a Trade. This becomes particularly important in 3+ Team Trades when the Touch Rule comes into play and Teams just want to send something to another Team to satisfy the rule.

What is a Tradeable Asset depends on whether it’s a 2-team Trade or 3+ Trade.

Two-Team Trades

Must send and receive at least one of the following:

1. Player Contracts;
2. Draft Pick (protected up to 55 picks);
3. Draft rights to an NBA Prospect;
4. Swap Rights;
5. Cash-in-Trade (must be $110,000).

3+ Team Trades

Must send and/or receive one of the following from two or more Teams:

1. Player Contract;
2. Draft Pick that actually conveys (can’t extinguish);
3. Draft Rights to an NBA Prospect;
4. Cash-in-Trade (must be $1,100,000 cash).

NBA Prospect

Defined as a Player (i) with a reasonable possibility of signing an NBA Contract during his career, or (ii) a starter/rotation Player in a reputable professional league.

Shall automatically be deemed an NBA Prospect if drafted in one of the three previous drafts.

Shall automatically be deemed a contributor in a reputable professional league if drafted in one of the five previous drafts.

Conditioned Draft Pick Time Limitation

A conditional Draft Pick will not be considered a tradeable asset if the following elements are met:

1. Conditional pick is conveyed after 6:00 P.M. E.T. on the day prior to the first day of the Regular Season;
2. The conditional pick is for the Draft Immediately following the Regular Season; and
3. The obligation to convey the pick is extinguished if not conveyed in the upcoming Draft.

The Touch Rule

When three or more teams are included in a Trade, each team involved in the Trade must touch at least two other teams.

A touch is either sending or receiving one of the tradeable assets listed in the list above.

🏀 Two Hypotheticals Showing How the Touch Rule Works

Hypothetical #1

Team A trades a Player Z to Team B. Team B trades a 2028 1st round pick to Team A. Team B trades a Player Y to Team C to have enough outgoing Trade Salary to satisfy a Traded Player Exception.

This would not satisfy the Touch Rule.
Team A: Touching Team B, but not Team C;
Team B: Touching Team A and Team C, satisfying the Touch Rule;
Team C: Touch Team A, but not Team B.

Hypothetical #2

The same trade as above, but now Team C sends a protected 2029 2nd round pick to Team A in addition to all other trade terms.

This now satisfies the Touch Rule.
Team A: Touching Team B and Team C;
Team B: Touching Team A and Team C;
Team C: Touching Team A and Team B.

Example 1 one does not satisfy the touch Rule as each Team only touches one of the other Teams:

Team A: Received an asset from Team B, sen

In Example 2, Team C is now sending an asset back to A. Now the Trade does satisfy the Touch Rule, as each Team is touching the other.

Trading Draft Picks

Draft Picks Generally

Note that the trading of Draft Picks is different than trading the Draft Rights to a Player. Draft Rights are attached to a Player that has been drafted, but is not yet signed.

Trading future Draft Picks requires the Team to identify the specific year of the pick–with the exception of pick protection contingencies–and the Team must already hold the right to the pick (i.e. cannot identify a pick as one that may be acquired in the future).

Pick Protections

Pick Protections Generally

Teams may make the conveyance of a pick contingent on where the pick is ordered in the Draft, called pick protection.

If a pick does not convey due to protections, additional contingencies can be added for the conveyance of a different pick or picks in the future, so long as specific years are identified.

Protections and the Stepien Rule

All protections must still satisfy the Stepien Rule, discussed in more detail below.

Protecting an Acquired Pick

A Team may add protections to a Draft Pick it had acquired from another Team in a prior Trade, subject to the following:

1. The Team must hold the Draft Pick unconditionally; or
2. The Team initially held the Draft Pick unconditionally, but entered into a separate Trade that had added pick protections.

Deferral Options

One or both Teams to a Trade may be permitted to exercise a one-time option to defer the conveyance or the receipt of a pick for one year only.

Both deferral and pick protections cannot be used at the same time.

The “Stepien” Rule

The 7-Year Rule

Both First and Second Round Picks can only be traded no later than the 7th Draft following the date of the Trade.

Missing Consecutive 1st Round Picks

A Team must never have the possibility to not have a First Round Pick in two consecutive Seasons. Therefore, if a protection creates the possibility, then it is prohibited.

A Team may own another Team’s Draft Pick to satisfy the Stepien Rule.

Conditional Language to Satisfy Stepien Rule

If it is unclear if/when a Draft Pick is going to be conveyed because of pick protections, then the following language can be used to satisfy the Stepien Rule:

• “Team A conveys its own 1st Round Pick to Team B in the second Draft following the Draft in which Team A is required under the terms of [a prior trade] to convey its 1st Round Pick to [Team involved in prior trade].”

However, a Team can only have two of these types of conveyances in effect at one time.

The language is not permitted if the year of the conveyance could occur in violation of the 7-Year Rule.

Cash-in-Trade

Cash-in-Trade Generally

A Team can send and receive 5.15% of the Salary Cap as Cash-in-Trade each Salary Cap Year ($7,964,320 for 2025-2026).

Each amount that is sent and received are accounted for separately and added on throughout the Season (i.e. it is not the “net” amount sent and received).

Cash-in-Trade only effects the owner’s bottom line and has no effect on Team Salary.

Conditional Cash-in-Trade

When Cash-in-Trade is included in a Trade as an alternative to the conveyance of a potential Draft Pick, then the accounting for the Cash-in-Trade is for the year the Trade was consummated, not when the cash was exchanged.

If the conditional Draft Pick is subsequently traded again, you again account for the Cash-in-Trade at the time of the Trade.

Payment of Bonuses

Depending on the type of bonus, the Sending Team or Receiving Team will be responsible for payment, which may be different than how Bonuses affect Team Salary (i.e. one Team may be responsible for paying a bonus while it’s added to the Team Salary of the other Team).

Signing Bonus

If a Signing Bonus is provided in a Contract as part of a Sign-and-Trade, then it is the responsibility of the Receiving Team. Any payment of the Signing Bonus by the Sending Team is considered a Cash-in-Trade and is governed by those rules.

Performance Bonus

Any Performance Bonus earned is considered the responsibility of the Receiving Team to pay.

The Teams can agree that the Sending Team pay all or a portion of the Performance Bonus, but any payment by the Sending Team is considered Cash-in-Trade and is subject to those rules above, and is accounted for at the time of the Trade, not when the Bonus is earned.

Other Incentive Compensation

For other types of Incentive Compensation (i.e. conditioning, academic achievement, extra promo appearances), the Team that rostered the Player when the Bonus was earned is responsible for payment.

Similar to Performance Bonuses, the Teams can alter the payment arrangement, subject to the Cash-in-Trade rules.

Trade Bonus

Trade Bonuses are paid by the Sending Team, but are added as Team Salary to the Receiving Team (visit the Trade Bonus page to view how the Trade Bonus is calculated).

Again, Teams can agree to a different payment arrangement of the Trade Bonus, subject to the Cash-in-Trade rules.

Options – Conditioned to Trade

The Player and Sending Team can agree to amend a Contract to exercise or not exercise an Option provided that the Contract is traded within 48 hours of executing the amendment.

Effect on Bird Rights

Generally, when a Player is Traded, the Receiving Team retains the same Bird Rights the Sending Team had.

Exception – Bird Rights do not transfer and he is treated as if signing as a Free Agent if the following elements are met:

1. Signs a 1-year contract (excluding any Option Year);
2. Would be a Full Bird or Early Bird Free agent under the Contract after completing such Contract; and
3. Is traded to a new Team without exercising any applicable Option for the second year.

Limitations on Extensions

If a Team acquires a Player they must wait 6 months before signing him to an Extension that (i) covers 5 Seasons, (ii) provides for increases/decreases greater than 5%, or (iii) Renegotiates his current Contract.

Team Salary and Trades

The Receiving Team will acquire the entire Salary for the current Season and future Seasons of the Player’s Contract in the Trade.

The current Season’s Salary is not prorated if the Player is traded midway through the Season.

Resigning a Traded/Waived Player

If a Team trades a Player and the acquiring Team subsequently waives the player, the Sending Team can’t sign him to a new Contract until the earlier of: (i) 1 year following the date all conditions to the Trade were satisfied or (ii) the July 1 following the last Season of the player’s Contract.

Existing Financial Obligations of Sending Team

Prior to the the assignment of any Player Contract, a Team must divest itself of any financial arrangements with the Player other than any Loans or Compensation earned prior to assignment.

The Sending Team will be responsible for paying Salary through the day of the assignment unless he dresses for the Receiving Team on that day.

Trade of Exhibit 10 Contracts

If (i) a Team has a G League Affiliate, (ii) acquires by assignment an Exhibit 10 Contract, (iii) the Contract has a Conversion Protection Amount, but not an Exhibit 10 Bonus, then the Contract is deemed to include an Exhibit 10 Bonus in an amount equal to the Conversion Protection Amount.

Stacking Minimum Contracts

In certain scenarios, a Team is limited in the amount of Minimimum Contracts it can send out in an unbalanced Trade. This is addressed in the Traded Player Exception page.

Publicly Demanding a Trade

Any Player or agent who publicly expresses their desire to be traded shall be subject to a fine and/or suspension, with a maximum fine of $150,000.

No Trade Clause

Express No Trade Clause

A Contract may include a No Trade Clause only if the Player (i) has 8 YOS and (ii) has rendered 4+ YOS for the Team he’s entering into the Contract with.

If so, the Contract may contain a prohibition or limitation of such Team’s right to trade the Contract to another NBA Team.

Automatic No Trade Clause

A Player receives an Automatic No Trade Clause (oftentimes referred to as an “Implicit” No Trade Clause), thus requiring his consent to be traded, if his Bird Rights would be reduced as a result of the Trade.

The Player may elect to waive the Automatic No Trade Clause at the time of signing (or anytime during the life of the Contract).

Bird Rights Reduction

Bird Rights are downgraded if the following elements are met:

1. Signs a 1-year contract (excluding any Option Year);
2. Would be a Full Bird or Early Bird Free agent under the Contract after completing such Contract; and
3. Is traded to a new Team without exercising any applicable Option for the second year.

Trade Restrictions

Date Restrictions

July Moratorium

Trades cannot be made during the July Moratorium from July 1st through July 6th.

Trade Deadline

Trade Deadline Date

February 5, 2026

Trade Deadline Rule

No Trades can be executed from the second Thursday before the All-Star Game until after the Team’s Regular Season ends.

Playoff Teams cannot trade any Player on its Playoff Roster until the Team is eliminated from the Playoffs, but can Trade any other assets after the Regular Season.

Entering Option Year

If a Contract could be the last season of a Player’s Contract based on the exercise or non-exercise of the Contract (Option or ETO), then the Player cannot be traded after the Regular Season unless the Option is exercised or the ETO is declined.

Note an Option can be exercised as a condition to being traded, as discussed above.

Sign-and-Trades

Any Sign-and-Trade must be completed prior to the Regular Season (for visit the Sign-and-Trade page for all rules on Sign-and-Trades).

Draft Picks

The deadline for trading the current Season’s Draft Picks is 2:00 P.M. ET on the day of the Draft.

Once the Draft begins, the Teams can begin trading the Draft Rights to the Players that are drafted.

Lottery picks cannot be traded from 6:00 P.M. ET the day before the Draft Lottery until the Draft Lottery concludes.

Transaction Restrictions

Below are the transactions that trigger a time restriction on trading a Player for a particular timeframe.

Completing a Trade

Trade Call

Below are the steps for completing a Trade:

1. Notify the League at least two hours before an impending Trade, if possible. League must be notified by 6:00 P.M. ET on Friday to perform a Trade Call on the weekend, otherwise it must wait until Monday (same rule applies for holidays).
2. Prior to the Trade Call, the parties exchange necessary health information.
3. All terms and conditions of the Trade are disclosed and agreed to during a conference call with the League.
4. Follow up email confirming the terms will be sent by the Teams to the League.
5. League will send an email confirming all conditions required for Trade to be consummated.

Physical Exam Contingency

Any Trade can be conditioned upon the Player passing a physical examination.

Sometimes, rather than cancelling the Trade, Teams will adjust the terms based on the results of a physical examination.

Trade of Team Personnel

The Trade of Team Personnel (e.g. a coach or G.M.) is permitted, but is limited to the Trade of future Draft Picks or cash, and is subject to the rules that apply to such Trades.

The “Traded Player Exception” Term Confusion

The term Traded Player Exception or a TPE is used by the media and the public differently than how it is used in the CBA.

In the CBA, the Traded Player Exception is the broad term referring to either the Aggregated, Expanded, Standard or Room TPE’s.

In the media, when they say a Team has a TPE, they are referring to the remaining money in Standard TPE that can be used to acquire another player without sending out additional Salary (this is discussed below).

Just know that when the media says something like “the Knicks have a $15 million TPE” they mean that the Knicks made a prior trade using the Standard TPE, which hasn’t expired yet. But in the CBA, a Traded Player Exception can refer to all of the different types of TPE’s.

Look Through the Lense of Each Team Separately

When determining if/how a Trade can work, you look through the lense of each Team separately, and optimize the Exceptions for each Team as best you can.

Not only do you look at each Team separately, but the Trade can be broken apart into multiple trades, so long as each separate Trade satisfies Trade Salary and the TPE’s.

Apron Salary vs. Trade Salary

Note the difference between Apron Team Salary and Trade Salary.

Trade Salary is used to determine if the Salary Limits for the applicable TPE is satisfied. Apron Team Salary is used to determine if a Team falls below the First or Second Apron, which then determines if certain TPE’s are available.

These calculations can be different.

Details of Exceptions

Summarizing the TPE’s

Before diving into the details of the TPE, it’s beneficial to see generally (i) what is limited when exceeding each Threshold and (ii) what is never limited in Trade.

Limitations When Exceeding Threshold:

What is Never Restricted in Trade:

More OTS and ITS – Sending out more OTS than ITS will never, on its own, be a reason a Team cannot execute a Trade.

Receiving more Players than Sending Out – No TPE restricts a Team’s ability to acquire more Players than sending out (Roster requirements still must be met).

Standard TPE

General Use

The Standard TPE is always going to be the TPE used when (i) there is one outgoing Player and (ii) the outgoing Player’s Trade Salary is more than the Incoming Trade Salary.

This is because there is no need for the Expanded TPE (don’t need to acquire more money than sending out) or the Aggregated TPE (don’t need to send out more than one Player).

Non-Simultaneous Trade

The major benefit to the Standard TPE is that it is non-simultaneous, which is not the case for any other TPE. The Team has 12 months (or less if over the First Apron) to complete the Trade.

What this means: The Team trades Player A for X amount of dollars more than the Incoming Trade Salary acquired. They now have a TPE for X dollars plus $250k. The Team has 12 months (or less if over the First Apron) to acquire additional players using this TPE without the need to send out more Outgoing Salary.

The Time-Crunch Caveat

There is no Apron limitation to use the Standard TPE, generally. But if you are over the First Apron, your 12-month time limitation to use the TPE shortens to the following:

If the Standard TPE arose during the Regular Season, then it expires at the conclusion of the current Regular Season.

If the Standard TPE arose after the Regular Season and before the following Regular Season starts, then it expires after the day of that following Regular Season.

Aggregated TPE

* The Aggregated TPE doesn’t require 2 or more outgoing players, but the Standard TPE would be used if only 1 Player was outgoing, as the same incoming Trade Salary is permitted for both.

General Use

The Aggregated TPE is used to combine multiple players to add up to enough Outgoing Trade Salary to acquire a Player with a larger amount of Incoming Trade Salary.

It is limited in the sense that you can only acquire 100% Outgoing Salary + $250k of what you are sending out. If you are looking to acquire more Trade Salary than you are sending out, then you must use the Expanded TPE, which is only available to Teams below the First Apron.

Note the Aggregated TPE is restricted to Teams below the Second Apron. So even if a Second Apron Team wants to aggregate players in one trade to obtain one player making less money, they can’t do so.

Expanded TPE

The Expanded TPE is the most flexible of the TPE’s, which is why it is only available to Teams below the First Apron.

It is the only TPE that allows more Incoming Trade Salary than Outgoing Trade Salary, and allows for more than one Player to be aggregated in Outgoing Trade Salary.

The amount of ITS allowed is dependant on the amount of OTS (see chart above). Note that the $8,527,000 cushion is increased in in line with the Salary Cap each season. The $8,527,000 figure is the amount for the 2025-26 season.

Room TPE

The Room TPE simply allows Teams that are landing slightly over the Salary Cap a $250k buffer to execute the trade.

The Room TPE cannot be used simultaneously with another TPE.

A Team is able to use a the Expanded TPE other than the Room TPE if it chooses, even if the Team has enough Cap Space to execute the Trade using the Room TPE.

Additional Limitations to Exceptions

The $250k Cushion and the First Apron

Any time there is a $250k cushion referenced, that cushion is eliminated if the Team lands over the First Apron.

Future Aggregation of Acquired Player

If a Player was acquired using a Salary Cap Exception, then such Player cannot be aggregated in a subsequent trade for two months from the date of acquisition.

• Exception – Prohibition does not apply if (i) Player was acquired prior to December 17th and (ii) is subsequently traded on the Trade Deadline or the day before the Trade Deadline of the same Salary Cap Year.

The “Stacking Minimum Contracts” Limitation

The CBA limits the ability for Teams to combine several Minimum Contracts to reach the applicable Outgoing Trade Salary needed to execute a Trade. Below is the specific rule.

A Team cannot trade more than one Minimum Traded Player if the following elements are met:

1. Trade takes place outside of December 15th through the NBA Deadline;
2. The Team is aggregating 3+ Contracts in Outgoing Salary;
3. The number of incoming Players is less than the number of outgoing Players

Minimum Traded Player

Defined as a Player whose Contract provides for his applicable Minimum Salary for the current Season in which the trade occurs, unless the trade is after the Regular Season, at which point it is the Salary for the subsequent Salary Cap Year.

Disabled Player Exception Limitation

If a Team acquired a Player using the DPE, then they cannot use him as part of a Traded Player Exception.

Hard Capping at each Threshold

Discussed in more detail in the Aprons page, it’s important to note that when a Team uses an Exception that has an Apron limitation, the Team is then hard capped at that Apron and can’t go over it for the remainder to Season (and sometimes, the subsequent Season).

This is to prohibit teams from acting like a Team that’s below the First Apron, use an Exception that’s below the First Apron, to then just go over the First Apron afterward.

Because of this rule, Teams will make their best effort to avoid the Expanded TPE if possible to avoid the First Apron hard cap, particularly if their Apron Salary is close to the threshold.

Players on Roster

Include all Salaries of the Players currently on the Team.

Waived Players

Guaranteed Salaries

If a Player is waived, but has Protected Compensation, then the Dead Salary will remain on the Team’s books after waiving the Player. Visit the Waiver page to review how the Dead Salary is calculated, and how a Team can Stretch the Dead Salary over a longer period of time.

Non-Guaranteed Salaries

The Universal Cutdown Date

Any Contract that is terminated for “lack of skill” from January 10th to the end of the Season is entitled to his full Base Compensation for the Season.

Therefore, if a Team seeks to terminate the Contract prior to the Salary being fully guaranteed for the Season, the Team must allow the Player to clear waivers prior to January 10th (i.e. he must be cut on January 8th).

Waiver Prior to the Universal Cutdown Date

If a Player’s Salary is non-guaranteed, then the only Salary that remains on the Team’s books after waiving the Player is his Per-Day Cap Hit starting as of the start of the Regular Season.

To calculate Per-Day Cap Hit, you take the Player’s Salary and divide by 174 (the number of Regular Season Days).

To calculate Salary earned, you multiply his Per-Day Cap Hit by the number of days on the roster, after release (not as of the waiver claim, which is two days earlier than release).

Note that if a Player’s Salary is subsidized to 2 YOS Minimum Salary, you remove the subsidy should the Player get waived during the Season.

If a Team does not want to incur a Per-Day Cap Hit, the Player must be waived by 5:00 P.M. two days prior to the first day of the Regular Season.

Pending Contracts

Salaries that are anticipated to be included in Team Salary based on any agreement that is required to be disclosed to the NBA.

Outstanding Offer Sheets

The outstanding Salaries called for under all outstanding Offer Sheets through the Restricted Free Agency process.

Cap Holds

Purpose

Cap Holds are a way to artificially add Team Salary as a placeholder for future signings.

It is meant to limit Teams from using all of their cap space to sign new UFA‘s, and then going back and resigning their own Players over the Salary Cap using Bird Rights.

There are four different types of Cap Holds:

1. Free Agent Cap Holds;
2. First Round Picks;
3. Open Roster Spots;
4. Salary Cap Exceptions.

Free Agent Cap Holds

A Cap Hold is added to Team Salary for any Player finishing the Season on the Team’s Roster.

Free Agent Cap Holds are based upon the prior Contract Type and Prior Salary.

Prior Salary – Include last Season’s Regular Salary, Signing Bonus allocation and his Incentive Compensation that was actually earned when the Player finished the Season.

Free Agent Cap Hold Formulas

Below are the formulas depending on Contract Type. However, a Cap Hold will never be above or below the Player’s applicable Maximum or Minimum Salary. If the formula exceeds Maximum or Minimum Salary, then adjust the Cap Hold to the limit.

First Round Pick Cap Holds

A Cap Hold is added to Team Salary for any Player drafted in the First Round by the Team.

Amount

Apply 120% of the Player’s Rookie Scale Amount.

Date Added

The Cap Hold takes effect immediately upon selection in the Draft.

Date Removed

The Cap Hold Remains in effect until one of the following occurs:

1. Signs his NBA Contract;
2. Team loses or assigns his Draft Rights;
3. Signs a Non-NBA Contract:
   • If the Player signs a Non-NBA Contract, the Cap Hold is released on the later of (i) the date he signs the Non-NBA Contract or (ii) the first day of the Regular Season;
   • The Cap Hold is reinstated on the following July 1st or when the Player is released from the Non-NBA Contract (unless renounced). You reapply the same rule above if he signs another Non-NBA Contract after July 1st;
4. Written Letter – The Team may remove the Cap Hold prior to the start of the Regular Season by issuing a written statement to the League that the Team will not sign the player during the Salary Cap Year accompanied by a written statement from the Player renouncing his right to accept any Required Tender made by him. The Cap Hold is reinstated on the following July 1st.

Open Roster Spot Cap Hold

A Cap Hold is added to Team Salary for open spots on the Team Roster to account for the requirement that the Team must sign a Player to fill the roster spot.

Counting Roster Spots

The following are counted as roster spots for this rule:

1. Players under Standard Contracts;
2. Players counting toward a Free Agent Cap Hold;
3. Players counting toward a Draft Pick Cap Hold;
4. Players whom Offer Sheets are given.

Calculating Cap Hold

Once you calculate roster spots, you calculate the potential Cap Hold accordingly:

Salary Cap Exceptions

Purpose

This Cap Hold is meant to avoid a situation where a Team can double dip and act as a Cap Space Team, and then act as a Team with a particular Salary Cap Exception.

When Applied

This Cap Hold is applied in the following circumstance:

1. One or more Salary Cap Exceptions are available to the Team; and
2. Team Salary is below the Salary Cap by less than the Exceptions available.
3. then the amount of the Exception is included in the Team’s Team Salary until the Exception is actually used or until the Team is no longer entitled to the Exception.

The amount of the Exception is included in the Team’s Team Salary until the Exception is actually used or until the Team is no longer entitled to the Exception.

Signings/DPE

When an Exception is used to sign a Player, the Player’s Salary takes the place of the Cap Hold (any unused portion will remain if the rule above still applies).

Similarly, when a DPE is used to sign or acquire a player, the Player’s acquired Salary takes the place of the DPE.

Assigned Contracts

The assigned Team shall include the entire Salary for then-current and future Salary Cap Years for any assigned Contract (via Trade or Waiver claim).

Minimum Team Salary Adjustment

If a Team falls below the Minimum Team Salary threshold, Team Salary will be adjusted throughout the Salary Cap year to equal the Minimum Team Salary threshold, starting at the beginning of the Regular Season.

Visit the Minimum Team Salary page for details.

Retired Players Under Contract

If a Player retires and a Team continues to pay the Player, allocate the Player’s unearned Protected Compensation for then-current and remaining Salary Cap Years pro rata over then-current and remaining years on a pro rata basis, irrespective of payment schedule.

Transactions With Retired Players

Any value or consideration determined to be considered Team Salary due to a finding that the transaction circumvented the CBA, per the process discussed in detail in the Circumvention page.

Grievances

When a Grievance is filed, Team Salary will be affected during the pendency of the proceeding and may be adjusted based upon how the Grievance is resolved.

Grievance Pending

When a Grievance is initiated seeking payment of Compensation for current or future Seasons that the Team asserts is not owed, 50% of the amount disputed is allocated as Salary to the Salary Cap Year it related to.

When a Grievance is initiated seeking payment of Compensation for prior Seasons, there is no adjustment until resolution.

Grievance Resolved – Single Year

When the Grievance is resolved the 50% that was applied to Team Salary during the pendency of the proceeding is adjusted up or down depending on the award.

The adjustment is first made to the applicable Salary Cap Year the Grievance is related to. However, if the Salary Cap Year has passed, then the adjustment is made to the Year in which the Grievance is resolved.

Tax Implications

The Team will be subject to additional tax obligations if the tax payment made is less than the amount it should have paid after the Grievance is resolved.

Vice versa, the Team will be entitled to a tax refund if the Team paid more in tax than it should have after the Grievance is resolved.

Grievance Resolved – Multiple Years

When the Grievance is resolved and concerns more than one Season, the aggregate amounts payable shall be allocated to each Season in proportion to the amount of Compensation that was in dispute for such Season.

• Exception – If the Grievance Arbitrator allocates amounts payable to the Player in specific Seasons in the Grievance Award.

Team Salary – What’s Excluded

The following is excluded from Team Salary:

1. Renounced Cap Holds;
2. Long-Term Injury Exclusion;
3. Excluded Contract Types:
   • Summer Contracts;
   • Two-Way Contracts;
   • 1-Year Minimum Contracts;
   • Exhibit 10 Bonuses;
   • Second Round Pick Exceptions (until 7/30).

Renouncing Cap Holds

Generally

A Team can renounce Cap Holds listed above to remove them from Team Salary.

For Free Agent Cap Holds, the Team provides a written statement to the League renouncing the Team’s right to resign the Player effective no earlier than July 1st following the last Season covered by the Contract.

Restricted Free Agent

A Team cannot renounce a Player who is a Restricted Free Agent.

A Team must relinquish ROFR rights to the Player, turning the Player into a UFA, which automatically renounces any Free Agent Cap Hold for the Prior Team.

Effect on Bird Rights

If a Team renounces a Veteran Free Agent Cap Hold, the Team will lose any Bird Rights to the Player. The Team will be just like any other Team in free agency at that time and need to use cap space or a different Exception to sign the Player.

Renouncing Down

A Team can “renounce down” from Early Bird Rights to Non-Bird Rights to avoid the required 2-Year minimum length requirement.

Offer Sheets and “Unrenouncing”

A Team won’t lose Bird Rights or Draft Rights (if First Round Pick Cap Hold and Draft Rights are renounced) in the following circumstance:

1. Team renounced the Cap Hold to make enough room to sign a different Player to an Offer Sheet;
2. The Prior Team matched the Offer Sheet and therefore does not sign with the Team;
3. The Team unrenounces the Cap Hold within two days of the match (or the physical, if applicable); and
4. The renounced Cap Hold is added back to Team Salary:
   • It can’t be added back to Team Salary (and thus the Team still loses Bird rights) if:
     • Team was at or below the Salary Cap when renouncing, and unrenouncing puts them above the Salary Cap;
     • Team was above the Salary Cap when renouncing, and unrenouncing would exceed the Team’s Team Salary at the time of renouncing.

Long-Term Injury Exclusion

Requirements

Below is the process for the Long-Term Injury Exclusion:

1. Must waive the Player;
2. Apply for cap relief after “waiting period”, which is:
   • If 10+ games played in the last Season, apply 1-year anniversary of final game;
   • If less than 10 games played in the last Season, then apply 60 days after the player’s last game, or 1-year anniversary of the final game in the previous season;
3. Must be the same Team Player was on when he was injured;
4. Can’t apply if already applied for DPE;
5. Certified by a physician that the injury is career-ending;
6. If the League grants the relief, the Salary is removed from Team Salary immediately, and the Team is prohibited from resigning the Player.

Playing Again

If the Player plays 25 games again after the League granted the relief above, the Team Salary for the current Season is included in Team Salary for the original Team, unless ruling was based on “materially elevated risk.” The Team may reapply to have the Salary excluded using the same process.

Contract Types Excluded from Team Salary

The following Contract types are excluded from Team Salary:

1. Summer Contracts;
2. Two-Way Contracts;
3. Exhibit 10 Bonuses;
4. Second Round Pick Exceptions (only until 7/30).

The “Soft Cap” Explained

Each Season, the Salary Cap is a threshold based upon Basketball Related Income (BRI) from the prior Season. To review the details of how it is set, visit the Finances section of the Guide, here.

Team Salary is used to determine if a Team is above or below the Salary Cap. Teams may not exceed the Salary Cap, unless the Team uses an Exception (discussed below) to do so.

This is called a “Soft Cap” system because while there is a Salary Cap, Teams are permitted to exceed the Salary Cap, and the majority of Teams do so on a year-to-year basis.

Exceptions – General Rules

Availability of Exceptions

To trigger an Exception, a Team must have Team Salary either (i) at/above the Salary Cap or (ii) under the Salary Cap for less than the Exceptions.

Non-Aggregation

A Team cannot combine multiple Exceptions to acquire a Player over the Salary Cap.

If more than one Exception is available to acquire a Player, then Team can choose which one to use. The choice will depend on (i) preserving the more valuable Exception for future use, or (ii) avoiding a hard cap.

Proration of Exceptions

General Rule

Most Exceptions hold full value until January 10th, at which point they begin reducing in value on a prorated daily basis. There are three Exceptions that have different rules:

1. Minimum Exception – Prorates from the start of the Season;
2. DPE – Does not prorate;
3. TPE‘s – Do not prorate.

Trades and Offer Sheets

If a Team is using an Exception to acquire a Player via Trade or to sign a Player to an Offer Sheet, than the full value of the Exception is still available.

Salary Cap Exceptions

The available Salary Cap Exceptions are:

1. Bird Rights;
2. Non-Taxpayer Midlevel Exception (NTMLE);
3. Taxpayer Midlevel Exception (TMLE);
4. Room MLE;
5. Bi-Annual Exception (BAE);
6. Disabled Player Exception (DPE);
7. Second Round Pick Exception;
8. Rookie Scale Exception;
9. Minimum Exception;
10. Traded Player Exception (TPE);
11. Existing Contracts;
12. Reinstatement;
13. Terminated Rookie Scale Contract.

Bird Rights

Summary of Bird Rights

Bird Rights allow a Team to re-sign a Player over the Salary Cap if he completed his most recent Contract with the Team.

There are three types of Bird Rights depending on how long the Player has been with the Team: Non-Bird, Early Bird, and Full Bird.

Below is a summary of the rights a Team has to sign the Player over the Salary Cap based upon those rights:

Accruing Bird Rights

To accrue Bird Rights, the Player must (i) be a Veteran Player, (ii) who is a Free Agent, (iii) who completed a Player Contract other than a 10-Day Contract (which can include a Two-Way Contract) with their Prior Team.

1. Non-Bird – Satisfies elements above but did not play more than 1 Season with Prior Team.
2. Early bird – (i) Played some or all of two preceding Seasons with Prior Team, (ii) had changed teams by Trade or Waiver Claim during the first two Seasons, or (iii) signed with his Prior Team during the first of the two Seasons.
3. Full Bird – (i) Played some or all of three preceding Seasons with Prior Team, (ii) had changed teams by Trade or Waiver Claim during the first three Seasons, or (iii) signed with his Prior Team during the first of the three Seasons.

The “Bird Clock” – Completing a Contract

As stated above, the Player must have completed his Contract with the Prior Team, meaning he must not have been waived.

However, this rule only applies to his most recent Contract. If he was waived during prior Contracts, you count the accrued Season and you do not reset the Bird Clock.

1. Waived during most recent Contract – Bird Clock resets;
2. Waived during prior Contract – Bird Rights continue to accrue.

Renouncing Bird Rights

Renouncing Bird Rights doesn’t automatically reset the Bird Clock. What it does is relinquishes the Team’s ability to use Bird Rights to resign the Player.

• If the Team still signs the Player using Room or a Minimum Exception then the Bird Clock continues to accrue.

A Team can also “renounce down” from Early Bird Rights to Non-Bird Rights. This would allow the Team to sign the Player avoiding the 2-Year minimum length of an Early Bird Contract.

Trades/Waivers and Bird Rights

If a Player is Traded or Waived, then the Bird Rights typically transfer to the Team acquiring the Player, subject to the following exceptions:

1. Waivers – To retain Full Bird Rights he must have been claimed in the first of the three seasons counted toward the Bird Rights.
2. Traded – Bird Rights reset to Non-Bird Rights if the Contract (i) is not a Two-Way Contract, (ii) is a 1-Year Contract (excluding Option Year), and (iii) the Player would have Full Bird or Early Bird Rights after the completion of the 1 Year.
   • This is why there is an Automatic No Trade Clause for such Contract.

Non-Taxpayer Mid-Level Exception

The Non-Taxpayer Mid-Level Exception (NTMLE) is available to Team’s below the First Apron to sign or acquire a Player or Players for up to $14,104,000 (2025-26).

NTMLE Availability

1. Arises on first day of Salary Cap Year and expires on last day of Regular Season;
2. Apron Salary must be below the First Apron (i.e. has nothing to do with being a Taxpayer. Name is from the old rules);
3. Team must not have used the Room MLE;
4. Can be used for Signing, Trade or Waiver claim;
5. Can use the NTMLE to match an Offer Sheet;
6. Can split the NTMLE into multiple Contracts;
7. Once used, the Team is hard capped at the First Apron;
   • Exception – If the Team uses the NTMLE to sign a Player or Players to terms that would satisfy thre TMLE, then the Team can exceed the First Apron and the signings will be treated as TMLE signings rather than NTMLE.

NTMLE Contract Limitations

1. Salary/Unlikely Bonuses cannot exceed 9.12% of Cap ($14,104,000 for 2025-26);
2. Length cannot exceed 4 Seasons;
3. Increase/Decrease limits up to 5%.

Taxpayer Mid-Level Exception

The Taxpayer Mid-Level Exception (TMLE) is for Team’s below the Second Apron to sign a Player or Players for up to $5,685,000 (2025-26).

TMLE Availability

1. Arises on first day of Salary Cap Year and expires on last day of Regular Season;
2. Apron Salary must be below the Second Apron (i.e. has nothing to do with being a Taxpayer. Name is from the old rules);
3. Team must not have used the Room MLE or the NTMLE exceeding the Contract terms of the TMLE;
4. Can only be used for a signing;
5. Can split the TMLE into multiple Contracts;
6. Once used, the Team is hard capped at the Second Apron.

TMLE Contract Limitations

1. Salary/Unlikely Bonuses up to $5,585,000 (2025-26, rising in line with the Cap);
2. Length cannot exceed 2 Seasons;
3. Increases/decreases up to 5%.

Roster-Building Limitations

If the Team uses the TMLE, then the Team is essentially saying its operating over the First Apron. As a result, the TMLE operates as its own hard cap, restricting the following transactions for the rest of the Salary Cap Year:

1. Bi-Annual Exception;
2. NTMLE;
3. Acquire Player via Sign-and-Trade;
4. Sign Player in Regular Seasons whose waived salary exceeds NTMLE amount;
5. Acquire Player using Expanded TPE;
6. Using Standard TPE after Regular Season (if it arose during Regular Season) or after subsequent Regular Season (if it arose during the Offseason).

Room MLE

The Room MLE is available when Team’s start under the Salary Cap and then seek to sign or acquire a Player or Players over the Salary Cap for up to $8,781,000 (2025-26).

Room MLE Availability

1. Arises at the start of the Salary Cap Year (or when the elements above are met) and expires at the end of trhe Regular Season;
2. Team Salary below the Salary Cap restricting use of BAE, NTMLE and TMLE;
3. Team has not used the BAE, NTMLE or TMLE;
4. Can acquire Player or Players via Signing, Trade or Waiver Claim;
5. Can split the Room MLE into multiple Contracts.

Room MLE Contract Limitations

1. Salary/Unlikely Bonuses up to $8,781,000 (5.678% of the Salary Cap);
2. Length cannot exceed 3 Seasons;
3. Incease/decreases up to 5%.

Room MLE Roster-Building Limitations

Once used, the following Exceptions are prohibited:

1. NTMLE;
2. TMLE;
3. BAE.

Bi-Annual Exception

The Bi-Annual Exception (BAE) is available to Teams under the First Apron to sign or acquire a Player or Players over the Salary Cap for up to $5,134,000 (2025-26). It’s Bi-Annual because it’s only available if the Team did not use it in the prior Salary Cap Year.

BAE Availability

1. Arises at the start of the Salary Cap Year (or when the elements above are met) and expires at the end of trhe Regular Season;
2. Apron Salary must be below the First Apron;
3. Team has not used the Room MLE in the same Salary Cap Year or the BAE in two consecutive Salary Cap Years;
4. Can acquire Player or Players via Signing, Trade or Waiver Claim;
5. Can split the BAE into multiple Contracts.

BAE Contract Limitations

1. Salary/Unlikely Bonuses up to $5,134,000 (3.32% of the Salary Cap);
2. Length cannot exceed 2 Seasons;
3. Incease/decreases up to 5%.

Disabled Player Exception

The Disabled Player Exceptions (DPE) gives a Team a new Exception to sign or acquire a Player when one of its existing Players is injured for the entire Season.

DPE Process

1. Team requests DPE from League between July 1st and January 15th;
2. League grants DPE based on whether the injured Player is deemed “substantially more likely than not” to return by June 15th by a physician;
3. If granted, the Team has until March 10th to acquire a Player using a DPE, and the DPE Amount (discussed below) is added to Team Salary);
4. Player can still return if DPE is granted, but the DPE will be extinguished if it is not used before his return.

Using DPE

1. Amount – The DPE is for the lesser of (i) fifty percent (50%) of the disabled player’s current Salary for the current year or (ii) an amount equal to the NTMLE amount for the current year.
2. Method – The Team can acquire a player using the DPE either by signing a new player to a 1-year deal or acquiring a player via Trade or Waiver who only has one year left on his contract (not to exceed the Salary amount above).

Second Round Pick Exception

The Second Round Pick Exception allows Teams to sign their Second Round Picks over the Salary Cap without the need to exhaust another Exception, subject to the Contract terms available below.

Contract Terms

1. Length – Must be for (i) 2 Seasons with a Team Option in the 3rd Year, or (ii) 3 Seasons with a Team Option in the 4th Year;
2. Salary – The Salary amount depends on Contract length.
   • If 2 Seasons plus Option:
     • First Year: Salary/Unlikely Bonuses up to Minimum Salary for 1 YOS;
     • Remaining Years: Applicable Minimum Salary.
   • If 3 Seasons plus Option:
     • First Year: Salary/Unlikely Bonuses up to Minimum Salary for 2 YOS;
     • Second Year: Salary/Unlikely Bonuses up to Minimum Salary for “Year 2” of Minimum Salary for 2 YOS;
     • Remaining Years: Applicable Minimum Salaries.

Contract Summary

Below is a summary of what a Team can offer a Second Round Pick using this Exception, depending on the length of the Contract. The chart is the Minimum Salary Scale for 2025-26.

Team Salary

A Contract signed using the Second Round Pick Exception is not counted toward Team Salary until July 31st.

Rookie Scale Exception

The Rookie Scale Exception allows a Team to sign its First Round Picks to their Rookie Scale Contracts over the Salary Cap.

Minimum Exception

The Minimum Exception allows a Team to sign a Player to a Minimum Contract over the Salary Cap.

The Contract must not exceed 2 Seasons in length and must be for the applicable Minimum Salary in each Season, with no Bonuses of any kind.

Traded Player Exception

Visit the Traded Player Exception page in the Trades portion of the Guide.

Existing Contracts

A Team can exceed the Salary Cap to retain is previously existing Contracts.

Reinstatement

If a Player is banned by the NBA and subsequently reinstated, the team can exceed the Salary Cap to resign the Player, limited to 5% raises.

Terminated Rookie Scale Contract

If a Player is (i) a Veteran Free Agent (ii) his Free Agency is because his Team did not exercise the 3rd or 4th Team Option of his Rookie Scale Contract, then his Prior Team can sign him over the Salary Cap for up to what he would have earned in the applicable Option Year.

Increases/decreases are limited to 5%.

Team Salary

Apron Team Salary includes Team Salary after subtracting all applicable Cap Holds.

Unlikely Bonuses

Apron Team Salary adds Unlikely Bonuses, which are not included in the initial calculation of Team Salary.

0 to 1 Years of Service Contracts

A Player’s Salary is increased to Minimum Salary for 2 YOS in situations when a Player signs as a Free Agent and has less than 2 YOS, called a 0 to 1 YOS Contract in the Guide.

A Contract is a 0 to 1 YOS Contract if the following criteria is met:

1. Player signs as a Free Agent;
2. Player has 0 or 1 Years of Service;
3. Player signs a Standard NBA Contract which can include (for purposes of this rule) the following, so long as such were signed as Free Agents:
   • Exhibit 10 Contract;
   • Two-Way Contract converted to a Standard Contract;
   • 10-Day Contract.

When a 0 to 1 YOS Contract is signed, you add the difference between his Salary (for Team Salary purposes) and the applicable Minimum Salary for a Player with 2 YOS. In other words, you’re switching his applicable Minimum Salary for that of a 2 YOS Minimum Salary.

Settlements/Grievances

Adjust Apron Team Salary for any amount that could be added to Team Salary as a result of a Grievance or Settlement.

Qualifying Offers and First Refusal Exercise Notices

The greater of (i) Salary plus Unlikely Bonuses called for in any oustanding Qualifying Offer or (ii) the Salary plus Unlikely Bonuses called for in any First Refusal Exercise Notice issued with respect to such Player.

Required Tender

The amount of any outstanding Required Tender.

Second Round Pick Exception

Any amount that was excluded from Team Salary between 7/1 through 7/30 because the Player signed as a Second Round Pick Exception.

Apron Limitations Table

If the Team’s Apron Team Salary exceeds the applicable Apron Threshold after executing the transaction, then the Team is prohibited from executing the transaction:

Transactions After Regular Season

General Rule

If a Transaction is executed after the Regular Season before the new Salary Cap Year, then the Team must be below the applicable Apron Threshold for the current Salary Cap Year and the subsequent Salary Cap Year.

Calculating Apron Team Salary for Subsequent Year

In calculating Apron Team Salary for the subsequent Salary Cap Year, you make the following assumptions:

1. Keep Apron Thresholds the same as the current Salary Cap Year;
2. Treat all Team/Player Options as exercised;
3. No outstanding ETO‘s are exercised;
4. No further transactions considered for remainder for then-current Salary Cap Year;
5. A Player met the Higher Max Criteria to reach a higher salary conditioned in his contract.

The Hard Cap

Current Season Hard Cap

If a Team executes a Transaction that has an applicable Apron threshold, then the Team is hard capped and cannot exceed that applicable Apron Threshold for the remainder of the Salary Cap Year.

Subsequent Season Hard Cap

If the Team executes the Transaction after the Regular Season but before the new Salary Cap Year, then the Team is also hard capped the subsequent Salary Cap Year.

Second Apron Draft Pick Penalties

Frozen Pick

If a Team is over the Second Apron at the end of the Regular Season, then its 1st Round Pick in the Draft seven years in the future is Frozen can’t be traded (conditionally or unconditionally).

Sliding or Unfreezing Pick

After the Draft Pick is frozen, you review the subsequent 4 Seasons to determine if it slides to the end of the draft or unfreezes:

1. If the Team exceeds the Second Apron Threshold in 2 of the 4 subsequent Salary Cap Years, then the Frozen Pick slides to the end of the First Round;
2. If the Team exceeds the Second Apron for fewer than 2 of the 4 subsequent Salary Cap Years, the pick will Unfreeze after the last day of the Regular Season in the 3rd Year the Team did not exceed the Second Apron.

If multiple Draft Picks in the same Season slide to the end of the Draft, then they are ordered in line with the Team’s record.

Tax Salary Calculation

Date of Calculation

Tax Salary is determined as of the start of the Team’s last Regular Season game, subject to a couple of minor adjustments made after the Regular Season.

Included in Tax Salary

Below are the items included in Tax Salary:

1. Total Salaries for the Team (subject to the following adjustments);
2. Unlikely Bonuses actually earned;
3. Trade Bonuses that (i) are included in Team’s Team Salary (ii) if the Trade is made after the Regular Season (if Trade made during Regular Season, it would already be included in Team Salary so adjustment would not have to be made after Regular Season);
4. Grievances/Settlements paid and counted toward Team Salary after the Regular Season;
5. 0 to 1 Years of Service Contracts Signed.

Excluded in Tax Salary

Exclude the following from Tax Salary:

1. Likely Bonuses that were not earned;
2. 50% of Compensation for a League’s suspension of a Player (not a Team suspension).

Tax Penalties

Tax Threshold

The Tax Threshold always equals 121.5% of the Salary Cap. For 2025-26 it is $187,895,000.

For a breakdown of all Thresholds, click here.

Initial Penalties

If at the end of the Regular Season, the Team’s Tax Salary exceeds the Tax Threshold, then the Team must pay a tax penalty.

Repeater Penalties

If the Team was a Taxpayer in 3 of the 4 immediately preceding Seasons, then the Team is deemed a Repeater and must pay the Repeater tax rate.

Tax Rates

Tax Bracket Increase

Each Tax Bracket level below increases in line with the Salary Cap each Season (starting at $5 million in 2023-24).

The Tax Brackets for 2025-26 are $5,585,000.

Note that the first Tax Bracket starts once Tax Salary exceeds the Tax Threshold.

Tax Rates

Below are the Tax Rates for both Non-Repeater and Repeater Taxpayers.

Tax Brackets

For 2025-26, below are the Tax Brackets based on the Tax Threshold of $187,895,000 and Bracket Amounts of $5,685,000.

The Tax Liability is how much a Team must pay if they exceed the entire Tax Bracket.

For example, if a Team’s Tax Salary is $204,950,000, then they pay the liability for each of the first three Tax Brackets, totaling $32,688,750.

Calculating Tax Liability

Take the following steps to find the Team’s Tax Liability:

Tax Payments

The tax penalties are paid to the NBA, and they become the exclusive property of the NBA.

The NBA may elect to distribute 50% of the tax penalties to the Teams that did not owe a tax (other than a Team that didn’t satisfy the Minimum Team Salary Threshold).

The other 50% (or more if not distributed to the NBA Teams) shall be used for “League Purposes,” which may include distributing it to the Teams.

Start of Regular Season

Minimum Team Salary and Minimum Threshold

Minimum Team Salary is calculated by taking Total Salaries for each Team and making adjustments below.

The Minimum Team Salary Threshold is 90% of the Salary Cap.

Determine Penalties

If Minimum Team Salary* is less than the Minimum Threshold at the start of the Regular Season, then the following penalties are enforced:

1. Pay League the difference between Minimum Team Salary and Minimum Threshold, which is then paid to the Players on their Roster;
2. Add a Cap Hold to Team Salary for the difference;
3. Prohibit Team from participating in profit sharing.

*Apply the following adjustments to Minimum Team Salary only for this specific rule:

1. Include Salary that was excluded under the Long-Term Injury Exclusion;
2. Include Salary that was excluded from an Expansion Team that waived a Player selected in an Expansion Draft;
3. Exclude EIPPA amounts counted toward Team Salary.

During Regular Season

New Minimum Threshold Established

If Minimum Team Salary was below the Minimum Threshold at the start of the Regular Season, then the Team’s Minimum Team Salary at that time is its New Minimum Threshold for the rest of the Salary Cap Year.

Dropping Below New Minimum Threshold

If a Team’s Minimum Team Salary falls below the New Minimum Threshold during the Regular Season, then it must increase its Minimum Team Salary at over the New Minimum Threshold by the end of the next day.

Minimum Cap Hold

A Minimum Cap Hold will be added to the Team’s Team Salary through the end of the Salary Cap Year for the difference between the Minimum Threshold and the lesser of (i) then-current Minimum Team Salary or (ii) Minimum Team Salary at the start of the Regular Season.

End of Cap Year

If at the end of the Salary Cap Year, the Team’s then-current Minimum Team Salary plus the payment made to the League is less than the Minimum Threshold, then the Team must pay the difference.

This adjustment might take place if Likely Bonuses were unearned.

How League Payments Work

The Team makes the payments due to the League under these rules within 10 days, and the League redistributes the payment to the Teams.