Houston's payroll is $200.4M, well over the $165.0M salary cap. It is listed as under the tax, with the threshold also at $200.4M. Durant at $46.1M, Sengun at $37.3M and Thompson at $35.9M are already on the 2027-28 sheet, so there is little room to change the roster.
July 6, 2025
The Durant trade shaped the top of the payroll. He came from Phoenix in a seven-team deal, and Jalen Green and Dillon Brooks went the other way. Durant is now the biggest contract at $43.9M, ahead of Sengun at $35.6M. Houston drafted the rest of the core: Sengun, Thompson, Smith, Eason and Sheppard. That kept salaries like Thompson's $12.3M on the books while Durant took the top slot.
This season
The payroll is $200.4M. That is over the $165.0M cap and listed as under the tax, with the threshold at the same $200.4M. The first apron is $209.0M and the second is $221.7M. After Durant and Sengun, the biggest deals are VanVleet's $25.0M player option, Smith at $23.6M and Eason at $14.1M. Adams adds $13.0M and Capela $7.0M. Houston is spending at the threshold, with nothing left over.
October 30
Rockets.com announced that Houston exercised Reed Sheppard's fourth-year team option. That locks in $14.0M for 2027-28, up from $11.1M now. It is a vote of confidence in the 22-year-old guard's growth, but it also adds money to an already crowded sheet. Sheppard is out with a back injury, with an estimated return of November 2.
Next summer
VanVleet's $25.0M has no 2027-28 number, and Bogdanovic and Tate, at $2.4M each, also drop off. Thompson's raise eats most of that savings: his salary jumps from $12.3M to $35.9M. Durant goes up to $46.1M and Sengun to $37.3M. Smith drops to $21.8M and Adams to $11.9M. Smart's $6.4M is a player option. The money coming off mostly pays for Thompson.
2027 through 2030
Houston owns its first-round picks only in 2028 and 2030. The 2027 and 2029 firsts are tied up in swaps. Of the second-rounders, 2028 goes to Charlotte, 2029 goes to Memphis, and 2027 and 2030 are swaps. With two clean firsts to trade and the payroll at the threshold, any upgrade will mostly come from players already on the roster.
Are the Rockets over the luxury tax in 2026-27?
No. Houston's $200.4M payroll is over the $165.0M salary cap but listed as under the tax, with the threshold at $200.4M.
How much will Reed Sheppard make in 2027-28?
$14.0M. Houston exercised his fourth-year team option on October 30.
