What's a Traded Player Exception? (NBA Trade Exception)

A vital tool within the NBA’s Collective Bargaining Agreement is the traded player exception (TPE or trade exception). Trade exceptions allow teams to take back salary in return for outgoing players, provided they are over the salary cap.
They come in two forms, simultaneous and non-simultaneous. The former represents the salary matching bands that allow teams to take in more salary than they send out in trade. For teams below the luxury tax threshold, the simultaneous trade exception depends on the outgoing salary:
Between $0 and $6,533,333-175 percent of the outgoing salary plus $100,000
Between $6,533,334 and $19.6 million-the outgoing salary plus $5 million
Above $19.6 million-125 percent of the outgoing salary plus $100,000
Teams above the luxury tax can only match salary at 125 percent plus $100,000, regardless of how much they send out (provided the team is over the tax after the trade).
For example, for a team under the luxury tax, a player with a $5 million salary can bring back up to $8.85 million. A player at $10 million can bring back up to $15 million. Taxpayers would be limited to $6.35 million and $12.6 million, respectively. And for a $20 million outgoing salary, regardless of the team’s luxury tax status, the incoming salary can reach up to $25.1 million.
A simultaneous TPE expires immediately upon conclusion of the trade. The non-simultaneous trade exception has a longer shelf life, serving as an IOU for a team that sent out a player in trade without receiving equal salary in return. That exception lasts for a full year, and teams can use it to bring in players earning up to $100,000 more than its total.

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