The four Welsh rugby regions have raised the amount they can spend on players' wages by £1m to £4.5m.
In December 2011 the regions - Cardiff Blues, Dragons, Ospreys and Scarlets - imposed a salary cap of £3.5m a year when all four were posting losses.
The rise reflects improved finances, with extra money from Europe and a new deal with the Welsh Rugby Union.
Pro Rugby Wales declined to comment, but it is understood the decision was mutually agreed after a review.
It is hoped the extra cash will help the regions retain star players and potentially bring more "Welsh exiles" home.
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Leigh Halfpenny, Jonathan Davies, George North and Luke Charteris are thought to be considering returning to Wales next season.
However, the regions - represented by Pro Rugby Wales - are expected to make building squad depth a priority, and not necessarily spend big figures on marquee signings.
The new ceiling - which is self-imposed - is still some way below that of England's Aviva Premiership.
Premiership Rugby Limited - the umbrella body that governs England's Premiership clubs - announced in October they would be raising their cap next season from £5.1m to £6.5m, and to £7m the season after that.
These figures exclude the salaries of two so-called "marquee signings" that remain outside the cap.