In a move set to reshape the competitive landscape of the NHL, the league and its players’ association have ratified a new collective bargaining agreement aimed at tackling long-standing concerns over financial fairness.

For years, teams based in tax-friendly states and provinces have enjoyed a distinct edge, luring top-tier talent with lucrative signing bonus structures and front-loaded contracts that exploited loopholes in the previous CBA. This imbalance has sparked heated debate among fans, analysts, and executives alike, as organizations in high-tax jurisdictions struggled to keep pace.

Now, with the introduction of new measures capping signing bonuses and tightening contract structures, the NHL is taking decisive action to level the playing field. As these changes come into effect for the 2025-26 season, all eyes are on how they will impact player movement, team strategy, and the overall balance of power across the league.

Provisions to signing bonuses changed to make player contracts fairer

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The NHL has seen the rise of a significant tax debate, where teams have taken advantage of unfair state and provincial tax rates to draw high-end players to their organizations.

To address these inequities, the NHL and NHLPA have ratified a new CBA, which takes effect at the beginning of the 2025-26 season, and includes provisions to address the disadvantages that some teams face, especially those with players in high-tax jurisdictions.

NHL finally addressing some signing bonus advantages in next CBA

One such CBA provision deals with the Signing Bonus Structure, which will be capped at 60%, and is designed to prevent teams from circumventing tax disadvantages.

For example, there are currently six NHL teams that enjoy a no-tax structure, including the Florida Panthers, who have recently signed ten deals with a yearly cap hit of $5M or more, of which eight had at least 80% paid upfront in signing bonuses, totaling $420M.

The Florida contracts would be deemed ineligible under the new CBA, as would also be Mitch Marner’s and Leon Draisaitl’s, because of the high percentage of signing bonus. There are five other teams that enjoy a no-tax structure.

Another key component of the new CBA addresses the Minimum Salary and Entry-Level Contracts, which specifies the limits on the maximum salary for players on entry-level deals. These are designed to ensure parity in the compensation for young players, regardless of the province or state.

The new NHL CBA also addresses Income Tax Consideration. Though it does not eliminate the impact of varying income tax rates, it does make changes to signing bonuses; the contract variability aims to reduce the ability of teams to exploit the differences.

NHL analyst Dom Luszczyszyn explained the league’s new approach to the tax advantages:

It’s also something that the next CBA is addressing by limiting signing bonuses to 60 percent of a player’s cap hit. For those hoping for the tax advantage to be addressed by the league, the NHL did actually do something about it (to an extent). It will still exist, but likely not to the same degree.”

– Dom Luszczyszyn

An important aspect of the CBA deals with Front-Loaded Contracts; the change restricts how teams can structure a deal year-over-year, which is now limited to 20% of the first year of the deal, affecting how much a team can claim against the cap.

The NHL and NHLPA will monitor the impact of these changes and may make further adjustments in the future to address tax iniquities.

This is a step in the right direction, as no-tax, and/or cash-flush teams have abused past CBA provisions to gain a competitive edge, as have the Florida Panthers, among other teams.