NEW YORK – The Los Angeles Dodgers will pay a $169.4 million luxury tax after winning their second straight World Series, bringing their two-year total to $272.4 million.
The New York Mets have the second-highest tax assessment among the record-tying nine teams, paying $91.6 million despite missing the 12-team playoffs, raising their taxes to $320.3 million in the past four years under high-spending owner Steve Cohen.
The Dodgers will pay the tax for the fifth straight season. Their total broke the previous record of $103 million set last year and surpassed the New York Yankees for the first time in total taxes since the penalty began in 2003, $519.4 million to $514.2 million.
Los Angeles’ tax payroll of $417.3 million surpasses the previous record of $374.7 million on the 2023 Mets. The Dodgers’ total included $949,244 in non-cash compensation for two-way star Shohei Ohtani, whose contract calls for the use of a suite for games at Dodger Stadium and an interpreter.
The Mets’ $346.7 million payroll included $369,886 in non-cash compensation for Juan Soto, whose contract stipulated that the team would pay for his use of a luxury suite, up to four premium tickets and personal team security for the All-Star player and his family. Soto finished with a record tax salary of $51,769,868 after collecting $400,000 in award bonuses.
The Yankees owe $61.8 million, according to final figures Friday by Major League Baseball and the players union and obtained by The Associated Press. Then came Philadelphia ($56.1 million), league champion Toronto ($13.6 million), San Diego (just under $7 million), Boston and Houston (both about $1.5 million), and Texas (about $190,000).
Nine teams paying the all-time record in 2024, and the total tax payout of $402.6 million surpassed the previous record of $311.3 million last year. The tax money is due to MLB by January 21.
By cutting payroll through a series of trades before the 2024 trade deadline and getting below the threshold that year, the Blue Jays reset their tax rates and saved about $21 million this year. Had they exceeded the minimum for a third straight season, their tax bill would have risen to nearly $34.65 million.
More than $1.63 billion in taxes have been imposed on 15 teams since the penalty began in 2003.
The Dodgers, Mets, Yankees and Phillies paid taxes in four straight seasons, with Philadelphia making $80.3 million surpassing Boston with $53.2 million for the fourth-highest total since 2003. San Diego came in sixth with $49.5 million. The top four teams exceeded the fourth threshold level, added in the 2022 employment contract and nicknamed the Cohen tax, in an initiative aimed at slowing down his spending.
After paying taxes in consecutive years, Atlanta fell below the minimum at $234.8 million.
Among the teams that pay the tax, the Mets, Astros and Rangers missed the playoffs.
Miami had the lowest tax payroll at $86.9 million, about one-fifth of the Dodgers’ total, and the Chicago White Sox ranked 29th at $91.8 million.
Total luxury tax spending rose 2.3% for the second season in a row, to $6.06 billion from $5.93 billion.
Tax payroll is calculated based on the average annual values, including earned bonuses, of players on 40-man rosters along with just over $17 million per team in benefits and $1.67 million for each club’s share of the $50 million player pool prior to arbitration beginning in 2022. Deferred salaries and deferred bonus payments are discounted to present values.
Because they owe taxes for three consecutive years, the Mets, Dodgers, Yankees and Phillies pay a 50% rate on the first $20 million above the $241 million threshold, a 62% rate on the next $20 million, a 95% rate on the amount from $281 million to $301 million and a 110% rate on anything above that.
Houston is in debt for the second year in a row and is paying 30% of the more than $241 million amount.
Boston, San Diego and Toronto pay a 20% rate on the amount that is more than $241 million but less than $261 million, a 32% rate on the amount that is more than $261 million but less than $281 million and a 62.5% rate on the amount that is more than $281 million but less than $301 million.
The employment contract calls for the first $3.5 million of tax money to be used to fund player benefits and 50% of the remainder to fund players’ individual retirement accounts. The remaining 50% of the remainder is allocated to an additional Commissioner’s Discretionary Fund to be distributed among teams eligible to receive revenue sharing funds that have increased domestic non-media revenue.
The initial threshold for next year is $244 million. If the Dodgers, Mets, Yankees or Phillies pass, they will pay the highest tax rate, rising to 110% for any amount over $304 million.
Regular salary numbers, which include 2025 salaries, pro rata shares of signing bonuses and vested bonuses, have not yet been finalized.