The Clippers’ $30 Million Fine Is Probably Tax-Deductible, but Kawhi’s $700,000 Fine Isn’t
The NBA hit the Clippers and Kawhi Leonard with penalties from the same investigation, but the tax code treats those two checks like they came from different planets entirely.
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Two checks got written this week, both stemming from the same NBA investigation, headed for wildly different fates on a tax return.
According to NBC News reporting by Andrew Greif, the league announced its penalties on Wednesday, September 2, 2026, after an independent review by Wachtell, Lipton, Rosen & Katz into alleged salary cap circumvention. The NBA fined the Los Angeles Clippers $30 million, and separately ordered Kawhi Leonard to pay $700,000. Owner Steve Ballmer was suspended from all league and team activities for one year, according to NBC News. The Clippers reject the findings and intend to challenge them through arbitration, so no money has changed hands. Leonard has publicly accepted responsibility for lapses in judgment by people within his inner circle.
Assuming the payments eventually get made, the tax code quietly picks sides.
Why the Team’s $30 Million Probably Comes Off the Top
The rule most people vaguely remember is that fines are not tax deductible. That is Section 162(f) of the Internal Revenue Code, which disallows deductions for fines or similar penalties paid to a government or governmental entity for violating a law.
The NBA is a private business league. A payment from a member team to the league for breaking league rules does not fall inside 162(f). It sits under the general rule in Section 162(a), which lets businesses deduct ordinary and necessary expenses of carrying on a trade. Discipline imposed by a private trade association on one of its members is generally treated as a cost of doing business.
Professional sports franchises are typically owned through pass-through entities, meaning the team itself does not pay federal income tax. Profits, losses, and deductions flow up to the owners’ personal returns. A large deduction taken at the team level generally reduces the owner’s taxable income rather than getting absorbed by a corporation.
The way it’s written, a penalty designed to punish a franchise gets partially cushioned by the tax code for the person writing the check.
Why Leonard’s $700,000 Almost Certainly Does Not Come Off Anything
An NBA player is a W-2 wage earner. Before 2018, an employee who paid a work-related expense out of pocket could try to squeeze it into miscellaneous itemized deductions. The Tax Cuts and Jobs Act suspended that entire category, and it remains suspended.
An employee ordered to pay a work-adjacent amount out of his own funds generally has nowhere on the return to put it. Same league, same investigation, opposite tax result, driven by which side of the employer-employee line the payer sits on.
Fine, or Repayment? The Word That Changes Everything
Two outlets described Leonard’s payment differently. NBC News framed it as money Leonard must repay to the league. Field Level Media, in a report dated September 2, 2026, called it a fine tied to the Kawhi Leonard probe. That wording gap is the whole tax question.
A punitive fine paid by an employee to a third party lands in the dead zone described above: no deduction, full tax on the wages that funded it.
A repayment is different. When a taxpayer gives back money that was previously received and reported as income, the tax code has separate machinery for handling it, and the treatment turns on when the repayment happens and how much is involved. The league’s stated basis for penalizing Leonard included failing to reimburse payments the Clippers made for personal expenses, which reads more like clawing back a benefit than imposing a punishment.
The public record does not tell us which characterization would actually control. The answer depends on facts that are not public: how the underlying dollars were reported, in which years, and how the payment gets documented.
What the Split Says
Two payments, one investigation, and a tax code that quietly treats them as different species. The owner writes his check into a structure built to absorb business costs. The player writes his out of already-taxed wages, with the deduction door bolted shut since 2018. The softness on one end and the hardness on the other are baked into the rules.
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