Record of 9 teams, including Dodgers and Yankees, pay luxury tax in MLB
A record 9 MLB teams were fined $311 million in luxury taxes, including the Dodgers, Mets and Yankees
A record of nine teams of the MLB they surpassed he threshold of the luxury tax for 2024according to a memo sent to teams on Friday and obtained by AM850.
The result was a record $311 million paid in fines, led by the Los Angeles Dodgers, who paid $103,016,896. The New York Mets were next with $97,115,609. The Chicago Cubs paid the least in taxes, with $570,309.
The other six teams, along with their penalties, that had Competitive Balance Tax (CBT) payrolls greater than $237 million, triggering the tax, include the New York Yankees ($62,512,111), the Philadelphia Phillies ($14,351,954), the Atlanta Braves ($14,026,496), Texas Rangers ($10,807,196), Houston Astros ($6,483,041) and the San Francisco Giants ($2,421,788).
The Dodgers, Mets, Yankees and Phillies were taxed at a base rate of 50% because they had gone over the tax limit in three or more consecutive years. The Braves and Rangers exceeded the threshold for the second year in a row, earning them a 30% tax rate. The Astros, Giants and Cubs were first-time offenders, earning them a 20% surplus tax.
If a team falls below the threshold in any season, its tax rate resets to 20%.
Since the Dodgers, Mets and Yankees were also all $60 million or more over the $237 million threshold, they were taxed an additional 60%, making their marginal rate the maximum of 110%. Meanwhile, the Phillies, Braves, Rangers and Astros were all between $20 million and $40 million over the threshold, triggering an additional 12.5% tax on their marginal rate.
A team’s CBT figure is determined using the average annual contract value of each player on the 40-man roster, plus any additional benefits to the player. Each team’s final CBT figure is calculated at the end of each season. The Dodgers’ CBT payroll for 2024 was $353,015,360, while the Cubs were just above the threshold at $239,851,546.
The first $3.5 million of profits are used to fund player benefits. Fifty percent of the remainder goes to the players’ retirement funds, while the other half goes to the Supplemental Commissioner’s Discretionary Fund and is redistributed among the teams receiving the revenue distribution.
