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Armor in Star Wars KOTOR nearly always features a "Max Dexterity Bonus". For example, an armor may feature "Max Dexterity Bonus +5".

Firstly, this is completely different to "Dexterity +5". A piece of equipment which gives you Dexterity +5 is raising the equipped character's Dexterity stat by 5 (e.g. the Advanced Alacrity Implant).

In order to understand the concept, it helps to first understand "Dexterity Bonus".

Every party member in KOTOR has 6 Attributes - Strength, Dexterity, Constitution, Intelligence, Wisdom and Charisma.

Dexterity mainly affects 2 things : the party member's Armor Class (AC), and their chance to hit with ranged weapons. A higher AC gives that party member a greater chance of evading damage.

A Dexterity of 10 is considered "normal".

A Dexterity of 12 is considered better than normal. As such, it improves that party member's Armor Class by 1 point. We can call this "Dexterity Bonus +1".

On the flip side, a Dexterity of 8 is subnormal. This would reduce Armor Class by 1 point.

Every 2 Dexterity points over 10 increase AC by 1. So, as I said, a Dexterity of 12 increases AC by 1. Dexterity 14 would increase AC by 2 (Dexterity Bonus +2), Dexterity 16 would increase AC by 3 (Dexterity Bonus +3), Dexterity 18 would increase AC by 4 (Dexterity Bonus +4), etc.

Note that you need the full 2 points to get the Bonus to Armor Class. What I mean is, for example, a Dexterity of 13 only gives a +1 Bonus to AC, the same as a Dexterity of 12. A Dexterity of 15 only gives a +2 Bonus; you need the full 16 to reach a +3 Bonus. Likewise, a Dexterity of 11 doesn't give any Bonus, the same as if Dexterity was 10; and so on.

What "Max Dexterity Bonus +x" means is that any Bonus to Armor Class that you would get from your Dexterity stat is potentially being limited to a Maximum number (Max is short for Maximum).

Let's assume your party member is wearing armor with no Max Dexterity Bonus. In that case, if said party member had a Dexterity of 10, they wouldn't get any Bonus or penalty to Armor Class. If they had a Dexterity of 8, they would get a -1 penalty to Armor Class. A Dexterity of 12 would give a +1 Bonus to AC; a Dexterity of 14 would give a +2 Bonus to AC, and a Dexterity of 20 would give a +5 Bonus to AC. A Dexterity of 22 would give a +6 Bonus to AC, and a Dexterity of 24 would give a +7 Bonus to AC.

Now let's assume, as an example, your party member has armor equipped which has a Max Dexterity Bonus of +5. If that party member has a Dexterity of 20, they would get a full AC Bonus of +5. However, at Dexterity 22 or higher, they still only get an AC Bonus of +5, NOT +6. This is because the "Max Dexterity Bonus" is +5. So the piece of armor doesn't allow any higher than +5, as this is the "Max". Likewise if their Dexterity was 24, they would only get a +5 Bonus to AC, NOT +7. However, if their Dexterity was 18, they would still get a +4 Bonus to AC. This is because it is a Maximum Dexterity Bonus; there is no Minimum.

Jedi Robes always have a Max Dexterity Bonus of +8. This means a Jedi wearing robes can have a Dexterity of up to 26 (which gives a +8 Bonus to Armor Class), but a Dexterity of 28 or higher means they still only get a +8 Bonus, NOT +9 or higher...

Hope this helps.