How does the luxury tax work?
In 2013-14, the tax rate will be as follows:
$1.50 for every dollar over the tax threshold up to $4.9M over the threshold
$1.75 for every dollar from $5 to $9.99M over the threshold
$2.50 for every dollar from $10 to $14.99M over the threshold
$3.25 for every dollar from $15 to $19.99M over the threshold
$3.75 for every dollar from $20 to $24.99M over the threshold
An additional $0.50 for every dollar for each additional $4.99M increment after that
This is different than in other years when it was a flat rate above the threshold. The incremental increase is supposed to deter teams from stacking rosters.