What do NBA financial terms like ‘apron’ actually mean?

Throughout the NBA season, several terms are casually thrown around when it comes to team and league finances. That’s especially true around the trade deadline, draft and start of free agency.

Here’s a quick (but far from complete) guide to what a few of those terms mean and how they impact team building. (You can keep track of teams’ current payroll here via Spotrac, and if you really want to dive into all of the finance rules set by the most recent collective bargaining agreement, that can be found here.)

Salary cap

This is the limit to the total amount of money teams are allowed to spend on players. But the NBA utilizes a “soft cap,” which allows teams to exceed that limit via various exceptions (such as the taxpayer and non-taxpayer midlevel exceptions) and other rules. The salary cap is set at $154.6 million for the 2025-26 season.

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Luxury tax

A team payroll threshold, set at $187.9 million for the 2025-26 season. Having a team payroll above the luxury tax does not actually bring any constraints other than the tax that ownership pays to the league. Non-taxpaying teams receive 50 percent of the total tax payments paid for that season (split evenly); teams that pay the tax do not receive anything. (That amounted to about $11.5 million per non-tax team last season.)

First apron

A team payroll threshold, set at $195.9 million in 2025-26. Teams above the first apron:

• Cannot take on more overall salary in a trade than they send out with their outgoing players (though front offices can sometimes get around that by structuring a transaction as multiple separate trades)
• Cannot sign a player waived during the season whose salary was richer than the non-taxpayer midlevel exception (set at $14.1 million in 2025-26)
• Cannot acquire a player via sign-and-trade or use a trade exception created the previous season, even if it has not expired yet
• Can only use the smaller taxpayer midlevel exception ($5.7 million this season) to sign players
• Cannot use that taxpayer midlevel exception to bring in players via trade or waivers

Second apron

A team payroll threshold set at $207.9 million in 2025-26. Teams above the second apron face all of the above first-apron restrictions, plus they:

• Cannot aggregate multiple players together in a trade to match salary
• Cannot send cash in trades or use the taxpayer midlevel exception to sign players
• Cannot send out their own player via sign-and-trades to add another team’s player
• Cannot trade draft picks seven years into the future, and if a team finishes a season with a payroll above the second apron in three of five years, future draft picks can be frozen or moved to the end of the first round