The Luxury Tax

This is an additional penalty for teams that are well over the cap and is triggered when league-wide salaries exceed 61% of BRI. It is basically an attempt to control big spending by a few teams and keep salary spending further under control. Teams that have payrolls that are substantially over the salary cap push the overall league payroll to well above the 43% of BRI ideal that the salary cap aims for. If this percentage gets as high as 61%, then those teams that are significantly over the salary cap pay a dollar per dollar tax for the amount they are over the luxury tax threshold. This tax money is then distributed mainly to those teams that have stayed under the luxury tax threshold.