NBA Contract Types Explained

Maximum Contract

A "max contract" in the NBA is the most money a team can pay a player — it's capped at a percentage of the salary cap. Players who have been in the league 0–6 years can earn 25% of the cap. Those with 7–9 years can earn 30%. Veterans with 10+ years can earn 35%. In 2025–26, that works out to approximately $38.7M, $46.4M, and $54.1M respectively. Most superstar contracts you read about are max deals.

Supermax Contract (Designated Player Extension)

The supermax is a special extension that allows teams to pay their own players up to 35% of the salary cap — regardless of their years of service — if they qualify through awards. To receive a supermax offer from their own team, a player must have won MVP, Defensive Player of the Year, or been named to an All-NBA team in the previous three seasons. This is why Nikola Jokić's contract pays $55.2M per year. Only the player's current team can offer the supermax.

Mid-Level Exception (MLE)

The mid-level exception allows teams that are over the salary cap to still sign free agents. In 2025–26, the non-taxpayer mid-level exception is worth approximately $12.8M per year for up to four years. This is one of the most important tools for teams trying to add a quality rotation player without breaking the bank.

Veteran Minimum

The veteran minimum is the lowest amount any experienced player can be paid. It scales with years of experience — a rookie minimum is approximately $1.1M, while a 10-year veteran minimum is approximately $3.2M. Teams use minimum contracts to fill out their rosters with experienced players late in free agency.

Bird Rights: Named after Larry Bird, Bird Rights allow teams to exceed the salary cap to re-sign their own free agents. As long as a team has Bird Rights on a player (earned by being on the roster for 3 consecutive years), they can offer that player a max contract regardless of how far over the cap the team already is. This is why you often see teams go far over the luxury tax to keep their own stars.

NBA Salary Cap 2026: The Numbers That Shape the Offseason

The 2025–26 NBA salary cap is $154.647 million. The projected cap for 2026–27 is $165 million — a roughly $10 million increase driven by the league's new $77 billion, 11-year media rights deal with NBC, ESPN, and Amazon Prime Video.

$154.6M
2025–26 Cap
$165M
2026–27 Projected
$201M
Luxury Tax Line
$147M
Cap Floor
$209M
First Apron
$222M
Second Apron

What is the Luxury Tax?

The NBA luxury tax is a penalty paid by teams whose total payroll exceeds the tax threshold (projected at $201M in 2026–27). Unlike the NFL's hard cap, NBA teams can spend as much as they want — but every dollar over the tax threshold costs additional money. The penalty is progressive: the more you exceed the threshold, the steeper the tax rate per dollar.

The First and Second Aprons

The 2023 Collective Bargaining Agreement introduced the "apron" system to discourage extreme spending. The first apron ($209M) restricts teams from using certain exceptions or acquiring players in sign-and-trade deals. The second apron ($222M) severely limits roster-building flexibility — teams cannot aggregate salaries in trades, cannot use the full mid-level exception, and have restricted trade options. This is why even billionaire owners are reluctant to push deep into second-apron territory.