The cost cap is an annual limit on what a Formula 1 team may spend on things that make the car go faster. Driver salaries, the three highest paid staff, marketing and travel sit outside it, and the figure is adjusted for the number of races in the season.
It was brought in to stop the championship being decided by budget alone. Before it, the gap between the largest and smallest teams ran into hundreds of millions, and the order at the front of the grid tracked spending closely enough to make the competition predictable.
For 2026 the base limit was set at 215 million US dollars for a season of twenty-four races or fewer, with an addition for each race beyond that. Capital spending on factories and equipment is handled separately under its own allowance rather than counting against the racing cap.
Enforcement is an audit rather than a scrutineering check, and the penalties range from a reprimand and a fine to restrictions on wind tunnel time and points deductions. The exclusions are the part teams argue over hardest, because deciding what counts as performance spending is where the real negotiation happens.