Short answers, pulled from the story.
The NBA salary cap for the 2025-26 season is set at $154.647 million. The cap is calculated as a percentage of the league's basketball-related income from the previous season and changes each year as league revenues change.
The Larry Bird exception allows NBA teams to exceed the salary cap to re-sign their own free agents, up to the maximum salary. It is named after the Boston Celtics forward because Boston was the first team permitted to use this rule. A player qualifies by spending three seasons with the same team without being waived or switching teams as a free agent.
The NBA had a salary cap in the mid-1940s, but abolished it after only one season. The league reinstated the cap for the 1984-85 season, limiting each team to $4.6 million in total payroll, in an effort to promote competitive balance.
The NBA luxury tax requires teams whose payroll exceeds a set tax threshold to pay additional money to the league on a bracket basis, with higher rates applying the further a team exceeds the threshold. Starting in 2013-14, the tax became incremental rather than a flat dollar-for-dollar penalty, and teams that exceed the threshold in multiple seasons face higher "repeat offender" rates. Tax revenues are redistributed among non-tax-paying teams.
The supermax contract, officially the Designated Veteran Player Extension, allows teams to offer qualifying veteran players a starting salary of 30 to 35 percent of the salary cap. Jayson Tatum of the Boston Celtics signed the largest supermax in NBA history, a five-year deal worth $315 million, surpassing the $304 million supermax signed by his teammate Jaylen Brown the previous offseason.
A hard salary cap, used by the NFL and NHL, forbids teams from exceeding the cap under virtually any circumstances. The NBA uses a soft cap, which allows teams to go above the limit under specific exceptions, most notably the Larry Bird exception that permits re-signing a team's own players. Teams that exceed the cap by a large enough margin face the luxury tax, but there is no absolute ceiling that cannot be crossed.