NBA Salary Cap & CBA Glossary

Plain-English definitions of the NBA salary cap and collective bargaining agreement terms that show up every offseason — aprons, exceptions, Bird Rights, cap holds, and the rest. No legalese, no jargon chains: each term is explained the way a front office would explain it to someone new.

Once a term makes sense, run the numbers yourself with the signing calculator, extension calculator, or roster builder.

The salary cap system

The NBA salary cap is a soft cap: teams can exceed it, but each dollar above a threshold costs them money and roster-building tools. These are the lines every front office plans around.

Salary Cap: The league-wide limit on total team salary, set each season as a share of projected basketball related income (BRI). It is a soft cap — teams can go over it by using exceptions or by re-signing their own players via Bird Rights. Only teams under the cap can sign an outside free agent for more than the mid-level exception.
Luxury Tax: A threshold above the cap. Teams whose payroll finishes above it on the last day of the regular season pay a tax bill on every dollar over, at escalating rates that get steeper the deeper a team goes. Repeat taxpayers (taxpaying in three of the previous four seasons) pay an additional penalty on each bracket.
First Apron: A hard line above the tax. A team over the first apron loses the non-taxpayer mid-level exception, the bi-annual exception, the ability to take back more salary than it sends out in a trade, the ability to sign a buyout player who earned above the non-taxpayer MLE, and the ability to use a trade exception generated the prior season.
Second Apron: The most restrictive line in the 2023 CBA. A team over the second apron cannot aggregate salaries in a trade, cannot send cash in trades, cannot use any trade exception, is limited to the taxpayer mid-level in name only (it is unavailable), and eventually has its future first-round picks frozen and moved to the end of the round.
Hard Cap: A ceiling a team cannot cross for any reason once triggered. Using the non-taxpayer MLE, the bi-annual exception, signing-and-trading a player, or taking back extra salary in a trade hard-caps a team at the first apron for the rest of the league year. Certain second-apron transactions hard-cap a team there.
Team Salary: The number that actually counts against the cap: all guaranteed contracts, plus cap holds, incomplete roster charges, likely incentives, and dead money — not just the salaries of players currently on the roster.

Free agency and Bird Rights

Bird Rights are the reason teams over the cap can still keep their own stars. They are earned by service time with a franchise and are technically a salary cap exception.

Bird Rights (Qualifying Veteran Free Agent): Earned after three seasons with the same team without clearing waivers or changing teams as a free agent. Full Bird Rights let a team re-sign its own free agent up to the maximum salary and for the longest allowable term, even while far over the cap.
Early Bird Rights: Earned after two continuous seasons with the same team. The team can re-sign the player for up to 105% of the league average salary (or 175% of his prior salary, whichever is greater), but the deal must run at least two seasons.
Non-Bird Rights: The default for a free agent with one season of service with his team. The team may offer up to 120% of his previous salary or 120% of the minimum, whichever is greater.
Cap Hold: A placeholder charge on a team's books for a free agent it has not yet re-signed or renounced. It preserves Bird Rights but eats cap space, which is why teams renounce holds before chasing outside free agents.
Restricted Free Agent (RFA): A free agent whose team extended a qualifying offer, giving it the right to match any offer sheet the player signs elsewhere. Teams get two days to match after an offer sheet is signed.
Qualifying Offer (QO): A one-year, guaranteed offer a team must extend to make a player a restricted free agent. Its value is set by the CBA and can be adjusted by the starter criteria (games started or minutes played).
Unrestricted Free Agent (UFA): A free agent free to sign with any team, with no right of first refusal for his prior club.
Sign-and-Trade: A departing free agent re-signs with his current team and is immediately traded, letting the player get a larger deal and the old team get assets back. The acquiring team is hard-capped at the first apron.

Exceptions

Exceptions are the tools that let an over-the-cap team add salary. Which ones a team has depends entirely on where its payroll sits relative to the aprons.

Non-Taxpayer Mid-Level Exception (NTMLE): Available to teams over the cap but below the first apron. It can be split among multiple players and used for up to four seasons. Using any part of it hard-caps the team at the first apron.
Taxpayer Mid-Level Exception (TMLE): A smaller mid-level for teams between the first and second apron, usable for up to two seasons. Teams above the second apron have no mid-level exception at all.
Room Mid-Level Exception: Available only to teams that used cap space and are then operating with 'room.' It sits between the taxpayer and non-taxpayer amounts and can be used for up to two seasons.
Bi-Annual Exception (BAE): A smaller exception usable only in alternating years, for up to two seasons, and only by teams below the first apron. Using it hard-caps the team at the first apron.
Traded Player Exception (TPE): Created when a team trades away a player and takes back less salary. The resulting exception can absorb an incoming salary in a later trade within one year. A TPE is a trade-only tool — it can never be used to sign a free agent, and it cannot be combined with other salary.
Minimum Salary Exception: Any team, at any payroll level, may sign a player to a minimum contract for up to two seasons. This is the only exception the second apron never takes away.
Disabled Player Exception: Granted when a league-appointed physician determines a player is substantially more likely than not to be out through the following June 15. It allows a one-year replacement signing worth up to half the injured player's salary, capped at the non-taxpayer MLE.

Contracts, extensions, and raises

Maximum salaries are tiered by years of service, and the rules for extending a contract differ sharply from the rules for signing a new one.

Maximum Salary: A percentage of the cap based on years of service: 25% for players with 0–6 years, 30% for 7–9 years, and 35% for 10 or more. The figure is a first-year salary; raises apply on top of it.
Supermax (Designated Veteran Player Extension): Lets a qualifying player with 7–9 years of service earn the 35% tier early. The player must have made an All-NBA team, won Defensive Player of the Year in the prior season or two of the past three, or won MVP in one of the prior three seasons — and must have spent his whole career with the team (or been traded on his rookie deal).
Rookie Scale Extension: An extension a first-round pick can sign in the offseason before his fourth season. If unsigned, the player heads toward restricted free agency the following summer.
Veteran Extension: An extension for a player already under contract. The first year is generally capped at 140% of his prior salary or 120% of the league average, with total length limits that depend on when the current deal was signed.
Renegotiation-and-Extension: A team with cap space can raise a player's current-season salary and extend him at the same time. Rare, because it requires real cap room while over-the-cap teams have none.
Raises: Annual increases are capped at 8% of the first-year salary when a player re-signs with his own team using Bird Rights, and 5% when signing elsewhere or using most exceptions.
Poison Pill Provision: When a recently extended player is traded, his outgoing salary and incoming salary are valued differently for matching purposes, which often makes him nearly impossible to trade.
Over-38 Rule: Anti-circumvention language that reallocates salary from seasons after a player turns 38 into earlier years of the deal, so teams cannot hide cap charges in years the player is unlikely to play.

Roster mechanics

The smaller rules that decide who counts, for how much, and when.

Two-Way Contract: A contract allowing a player to move between the NBA team and its G League affiliate. Teams may carry three two-way players, and their salaries do not count against the cap.
Dead Money: Salary still charged to a team for a waived or bought-out player. It counts fully toward the cap, tax, and aprons.
Stretch Provision: Lets a team spread the remaining guaranteed money of a waived player across twice the remaining seasons plus one, lowering the annual hit but extending the dead money.
Incomplete Roster Charge: A charge applied for each open roster spot below 12 when a team is calculating cap space, priced at the rookie minimum.
Likely and Unlikely Incentives: Bonuses judged 'likely' (based on the prior season's performance) count against the cap immediately; 'unlikely' bonuses do not, but are reconciled at season's end.
Salary Matching: The rule that an over-the-cap team must take back a salary amount within a set band of what it sends out in a trade. First-apron teams must match dollar-for-dollar or less; second-apron teams cannot aggregate salaries at all.