What is salary cap?
The salary cap is the payroll limit that decides how a team can add players. For 2026-27 the NBA cap is $164,961,000. It is a soft cap: teams can go over it, but only through specific exceptions.
How it works
The cap is set each summer from projected basketball related income, the pool of league revenue the players share. It takes effect at 12:01 a.m. Eastern on July 1, when free agency opens.
A team under the cap can sign any free agent outright, up to its available room. Once a team is over the cap, it can only add salary through exceptions: Bird rights to re-sign its own players, the mid-level and bi-annual exceptions, minimum contracts, rookie contracts and trade rules. That is why most NBA payrolls sit well above the cap.
The cap also anchors other numbers. Maximum salaries are percentages of it, the rookie scale is tied to it, and the floor, tax line and aprons are all set relative to it.
The numbers
Up about 6.7%
Prior season
ESPN projection
An example
A team with $150 million in guaranteed salary has about $15 million in room. It can sign a free agent for that amount directly. A team at $180 million has no room, so it would need the mid-level exception to offer that same player a contract.
What it means for a player
Before free agency, the question is not only which teams want you but which teams can pay you. A team under the cap can offer real money on day one; a team over it is limited to its exceptions.
Sources
Reviewed September 26, 2026 by McKinley Malbrough III, J.D., MS-HRM, certified WNBA player agent and former certified NBA agent. Figures are refreshed each July. General information, not legal, tax or financial advice.