The Clippers’ $30 Million Fine Is Probably Tax-Deductible, but Kawhi’s $700,000 Fine Isn’t

The Clippers' $30M fine flows through their pass-through structure to reduce Steve Ballmer's taxable income, because the NBA is a private league, not a government.

Kawhi Leonard gets no deduction on his $700K because the 2018 Tax Cuts and Jobs Act permanently shut the door on miscellaneous employee expense deductions.

If Leonard's payment is classified as a repayment of previously taxed income rather than a fine, entirely different tax rules apply and could change his outcome.

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.

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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.