The Denver Nuggets will decline Nikola Jokic’s team option for next season — making him a restricted free agent — and plan to reach agreement on a five-year, $146.5 million maximum contract with the 23-year-old star, league sources told Yahoo Sports.

Denver could have exercised a $1.6 million, fourth-year team option for next season but that would have allowed Jokic to enter unrestricted free agency in 2019. Free agency begins on July 1 at midnight ET.

The Nuggets faced a June 29 deadline to decide on Jokic’s option, and they have said repeatedly that they plan to retain Jokic for the long term. Both the franchise and Jokic’s representatives have worked through discussions on his future in recent weeks, league sources said.

Nikola Jokic has played three seasons with the Nuggets. (AP) More

Jokic has become one of the NBA’s brightest young stars, a 6-foot-10 big man able to shoot from long range, handle the ball, pass, rebound and finish in the paint. The Nuggets’ selection of Jokic with the No. 41 pick in the 2014 NBA draft is a reflection of the franchise’s scouting under president of basketball operations Tim Connelly, and the center’s development as a near All-Star is a testament to the work of Jokic and the organization.

Jokic averaged 18.5 points, 10.7 rebounds and 6.1 assists while shooting 39.6 percent from 3-point range in 75 games last season.

Jokic helped lead the Nuggets to a playoff push this past season, finishing 46-36 and losing to Minnesota in essentially a play-in game on the last night of the regular season. He recorded 10 triple-doubles on the season and continued to emerge as a leader alongside young Nuggets Jamal Murray and Gary Harris.

Jokic, a native of Serbia, played for KK Mega Bemax from 2012-15 before signing a four-year rookie contract with the Nuggets.

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