Under his old contract, Palmer was set to make $11.5 million. Prorated over the final 11 games, he would have made $7.44 million. The Raiders will pay him $2.5 million for the remainder of this season.
They did guarantee $5 million of his $12.5 million salary next season, but nobody thought the Raiders would have parted ways with him when they surrendered two draft picks to the Bengals.
Palmer is scheduled to make $12.5 million next season, $13 million in 2013 and $15 million in 2014. But Palmer will make $5 million less this season.
The Raiders acquired Palmer from the Bengals Tuesday for a 2012 first-round pick and a second-rounder in 2013 that could become a first-round selection if the Raiders make it to the AFC title game this season.
A source said Palmer is expected to start Sunday's game against the Kansas City Chiefs.
Adam Schefter is ESPN's NFL Insider.