Yes, Sleeper supports Taxi Squads.

Taxi squads, also known as practice squads, are becoming more popular in dynasty fantasy football leagues and offers the option of stashing rookies in additional slots that don't count against your roster limit.

There are 3 settings that affect Taxi Squads in League Settings.

1. Taxi Slots

You can turn on Taxi Squads by setting the number of Taxi Slots.

2. Taxi Deadline

This is the deadline for which you must finalize your Taxi Squads for your rookies.

The default is Week 1 of the season, but this can be adjusted to a different week.

3. Taxi Years

This is the number of years you can stash a player until they are forced to come off the Taxi Squad.  For example, if Taxi Years is set to 3 years, then a Rookie must come off the Taxi Squad in his 4th year or the owner cannot make lineup changes or add/waiver players.

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