A record nine Major League Baseball teams are going to have to pay the tax man come January. According to ESPN and the Associated Press, the league sent a memo to the teams late Friday, Dec. 20, outlining the bill, known as a “luxury tax.”
The luxury tax, also known as the Competitive Balance Tax, is a tool used by the MLB in lieu of a salary cap on 40-man rosters to discourage runaway spending. The tax takes into account each player’s average annual value, as well as multipliers for teams that are repeat offenders. The threshold teams had to stay under last season was $237 million. Next year the line will go up to $241 million.
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No surprise, the reigning World Series Champions, the Los Angeles Dodgers, are leading the way. They had the highest payroll in 2024 and owe a $103 million luxury tax.
So is paying the massive tax bill worth it? Well, including the Dodgers, seven of the nine teams on the list made the playoffs this past season.
Below are the nine teams over the threshold and what they owe. The top three on this list –– Dodgers, New York Mets and New York Yankees –– have been over the tax for three consecutive seasons and, as a penalty, are paying at a 50% rate.
- Los Angeles Dodgers $103 Million
- New York Mets $97.1 Million
- New York Yankees $62.5 Million
- Philadelphia Phillies $14.4 Million
- Atlanta Braves $14 Million
- Texas Rangers $10.8 Million
- Houston Astros $6.5 Million
- San Francisco Giants $2.4 Million
- Chicago Cubs $570,000
The cumulative $311 million tax is a record, shattering last year’s mark of $209 million. The money collected by the league, which is due on Jan. 21, covers player benefits and retirement funds, while 50% is redistributed to teams that need revenue sharing to stay competitive. Those teams will get about $15 million each this spring.
