Repeater tax looms large as Nets look to finish building out roster for new season

"If the Nets are going to add a player to this roster as-is, that deal is probably going to come in at less than $10 million in annual salary. Welcome to the 2023 NBA offseason, where the Nets find themselves as repeat tax offenders after three seasons chasing championships with Kevin Durant and Kyrie Irving on the payroll. And with a projected $155.4 million in guaranteed salaries for the 2023-24 season, the Nets don't have much wiggle room before incurring stiff luxury tax penalties."

"As repeat tax offenders, however, the Nets would be paying $2.50 on the dollar for any transaction that takes them up to $5 million over the tax threshold, with the tax increasing $0.25 on the dollar for the next $5 million spent and $0.75 on the dollar for each of the ensuing $5 million spent. It's something the Nets must consider as they sit at the intersection of any Damian Lillard or James Harden mega deal this offseason."

"After dumping Joe Harris' and Patty Mills' contracts in cost-cutting moves, it's safe to say avoiding the luxury tax is a priority in Brooklyn this offseason. Yet with two mega deals on the table in Philly and Portland, the Nets are in a holding pattern of sorts. The organization is armed with eight tradeable first-round picks in 2025, 2027 and 2029, and has a number of easily tradable and coveted contracts that can be moved both to create cap space and acquire additional draft assets."

Brooklyn projects $155.4 million in guaranteed salaries for 2023-24 and risks large luxury-tax penalties as a repeater tax offender. The repeater schedule raises tax rates, starting at $2.50 per dollar up to $5 million over the threshold and increasing for each additional $5 million. The Nets can likely only add players on deals below $10 million annually without incurring heavier tax costs. Brooklyn cleared Joe Harris and Patty Mills to reduce payroll and is prioritizing tax avoidance. The front office holds eight tradeable first-round picks and several movable contracts, positioning the team as a third-party trade facilitator amid potential Lillard or Harden moves. Sean Marks must balance cap space, draft assets and tax exposure.

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