The Southeastern Conference is considering a luxury tax on member schools that spend more on players than the revenue sharing cap allows under the House v. NCAA settlement, sources told ESPN on Friday.

A working group of athletic directors, university presidents and general counsels has been studying the idea over the past few weeks, and the league could vote on the measure in the near future, sources said. The SEC would like to have the tax approved before college football's early signing period, which runs Dec. 2 through 4.

Sources said considerable debate remains, but one formula under discussion would gradually tax schools once they move past the annual revenue sharing cap. That cap stands at $21.3 million for the 2026-27 academic year and is set to climb to roughly $22.2 million in 2027-28 under the terms of the House settlement.

As an example of the approach being weighed, a program could be taxed 1% for spending $1 million over the cap and 3% for spending $3 million over it. Sources cautioned that the formula still needs refinement and that conversations about the specifics are ongoing, though they said the overall concept has been well received.

"Some schools want it to be where the penalty is as low as possible, so it's cheap enough to where you're more motivated just to pay it directly and report it, and everybody's on the same page and people stop playing games," a source told ESPN.

Beyond discouraging schools from blowing past the cap, the SEC hopes a luxury tax would bring more transparency, giving programs a clear picture of what their rivals are spending. League officials also want to limit or eliminate the need for third parties to "wash" money, described as an expensive and inefficient feature of the current system.

"It's a lot better if we all know what everybody's doing right now," a source told ESPN. "We're living in this world where we have no idea what anybody's spending. Agents can play you all day long because there is no general database. We're starting to get some information, but there's not enough transparency to know what people are really doing."

What the league would do with tax revenue remains an open question. Some of the money might have to go to plaintiffs' attorneys in the House case, while other options include funding the College Sports Commission, which enforces NIL, revenue sharing and roster limits, or bankrolling a post-graduate medical fund for college athletes. The SEC is not looking to copy Major League Baseball's competitive balance tax, which redirects some money from big spenders to lower revenue clubs in small markets.

The discussions come after the Big Ten announced last month that it was adopting a conference-level rule limiting its schools' involvement in third-party NIL agreements ahead of potential congressional passage of the Protect College Sports Act. The PCSA would raise the amount schools can spend on direct payments to players by $27.5 million, more than doubling the current $21.5 million cap.

Combined with institutional NIL payments permitted by the House settlement, the Big Ten rule would restrict institutional involvement in student-athlete NIL agreements to a total of about $49 million per school, with escalating financial penalties and other disciplinary measures for violations. Whether Congress will pass the PCSA is now unclear following the results of Tuesday's elections.