Brady is currently scheduled to make $15 million this season, and the team is adding the incentives to bring him to closer to the market, the source told Schefter.
The adjustments are similar to what the Patriots did last year with tight end Rob Gronkowski's deal, the source told Schefter.
Brady, the NFL's reigning Most Valuable Player, turned 41 on Aug. 3 and is entering his 19th season. He has two years remaining on his contract.
His average salary of $15 million ranks 22nd in the NFL, just behind the Cleveland Browns' Tyrod Taylor ($15.3 million) and the Cincinnati Bengals' Andy Dalton ($16 million), per the Roster Management System. The highest-paid quarterback is Matt Ryan of the Atlanta Falcons, who signed a deal worth $30 million per season.
In the reworked contract Brady had $10M of his $14M base salary for 2018 converted into a signing bonus, a league source told ESPN's Field Yates.
For Brady, who can also now earn an additional $5M via incentives, this guarantees him $10M upon payment of the bonuses.
For the team, this means that Brady will not count any more against the salary cap under the revised deal, as that $10M signing bonus prorates over two years. Brady's cap hit remains at $22M this year, while his 2019 cap hit is now $29M.
After skipping voluntary offseason workouts in May for personal reasons, Brady was asked if his contract status was a reason he stayed away from the team.
"I've never talked about my contract. I've never brought up money for a lot of reasons that I've said over the years," the five-time Super Bowl champion said. "Those things are very personal."
Brady was 385-of-581 for a league-high 4,577 yards, with 32 touchdown passes and 8 interceptions, while leading the Patriots to a 13-3 record for the 2017 regular season.
Last season, the Patriots restructured Gronkowski's contract to give him the opportunity to boost his salary from $5.25 million to $10.75 million through performance-based incentives. According to Spotrac, Gronkowski wound up making $10,187,500 in 2017.
ESPN's Mike Reiss contributed to this report.