Major League Baseball has finalized its calculations of teams’ competitive balance tax payrolls for the 2025 season. As first reported by The Associated Press, nine teams surpassed the $241MM base threshold. In a separate post, The AP lists the finalized CBT numbers for all 30 teams.
The payments are as follows:
- Dodgers: $169.4MM
- Mets: $91.6MM
- Yankees: $61.8MM
- Phillies: $56.1MM
- Blue Jays: $13.6MM
- Padres: $7MM
- Astros: $1.5MM
- Red Sox: $1.5MM
- Rangers: $190K
Teams pay escalating penalties for exceeding the threshold in consecutive seasons. The Dodgers, Mets, Yankees, Phillies and Rangers have all paid the tax in at least three straight years — subjecting them to the highest escalator fees. The Astros went over the line for the second straight season. The Blue Jays, Padres and Red Sox had gotten below in 2024 and are categorized as first-time payors.
This is the second straight year in which nine teams paid the CBT. The Braves, Giants and Cubs had gone over the line in ’24 but dipped below this year, which resets their status going into 2026. Atlanta’s active offseason puts them in position to go back into tax territory next year, when the base threshold climbs to $244MM. San Francisco and Chicago each have projected CBT numbers more than $40MM below that right now.
While public estimates from RosterResource and Cot’s Baseball Contracts offer an excellent approximation of teams’ payroll commitments, the official numbers are not available during the season. It’s not uncommon for rounding errors in those calculations to vary by a few million dollars. That generally isn’t a big deal but can matter for teams that are hovering very close to the tax line. Each of the Red Sox ($249MM payroll), Astros ($246MM) and Rangers ($241.38MM) were believed to have gone narrowly beyond the $241MM cutoff, but that wasn’t 100% established until this evening — particularly in the case of Texas.
The Dodgers ($417MM), Mets ($347MM), Yankees ($320MM), Phillies ($314MM) and Blue Jays ($286MM) all had payrolls above $281MM. That was the third tier of penalization and marked the point at which a team’s top draft pick is dropped by 10 spots. The Mets were the only of those five that didn’t make the playoffs. Their top pick drops from 17th to 27th. The Yankees, Philadelphia, Toronto and L.A. all have their first-round pick dropped to between 35th and 40th.
Teams that paid the CBT are entitled to the lowest level of compensation for losing free agents who declined a qualifying offer. They receive a draft choice after the fourth round for each qualified free agent who walks. They’re charged the heaviest penalty — their second- and fifth-highest picks in 2026 and $1MM from their ’27 international bonus pool — for signing a qualified free agent from another team.
San Diego and the Mets receive a pick after the fourth round for losing Dylan Cease and Edwin Díaz, respectively. Toronto (Bo Bichette), Houston (Framber Valdez) and Philadelphia (Ranger Suárez) would receive the same if their free agents sign elsewhere. The Dodgers surrendered their second- and fifth-round selections for Díaz. Toronto is slated to do the same for Cease, but if Bichette walks, they’d give up that compensatory pick instead and get their fifth-rounder back.
The Dodgers’ combined payroll and tax bill for the 2025 season lands north of $586MM. The two-time defending champions’ tax hit alone is higher than the payrolls of the bottom 12 teams in the league. There were 14 clubs that had a CBT number above $200MM. The Braves, Cubs, Giants, Angels, Diamondbacks and Mariners were the other six teams above the median. All but Seattle spent more than $200MM.
On the other end, the Marlins ($87MM) and White Sox ($92MM) were the two teams with payrolls below $100MM. The Rays ($103MM), Pirates ($109MM) and Athletics ($118MM) rounded out the bottom five — followed by the Guardians, Nationals, Twins, Brewers and Reds.
Overall, the league will collect just under $403MM in taxes. Teams must make the payments by January 21. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams.
If there’s one thing we as Tigers fans never have to worry about, it’s exceeding the luxury tax. 😎
If Mike was still alive he would not let this happen, it’s becoming a trend for the children of owners to take over and lower payroll
sad – Owners who are running out of time tend to spend more if they’ve never won a championship, can’t really blame them.
Fever, it’s just stupid to go over the tax level by $1.5m. If you’re crossing that line, go for it. $190k? lol.
Fever- If I remember correctly wasn’t Dustin May the reason the Sox went over at all? Talk about a waste.
dewey – They were $4.7M over, the above article states the amount they have to pay in luxury tax is $1.5M although that’s a bit more than the 20% penalty, not sure why.
Here’s something I haven’t seen anyone mention …… if let’s say 25% or more of the 2027 regular season gets wiped out, that would give the Red Sox a CBT reset. That’s why they don’t really care about going over 2 consecutive years, they are banking on not being a 3-time offender in 2027.
Uncle – You won’t believe this ….. it wasn’t just May, the Sox paid him only $700K because his 2025 salary was only $2.1M.
It was also Matz, the Sox paid him $4M because his 2025 salary was $12.5M.
Without acquiring either one, they’d have been right at the threshold.
True. But that’s usually when owners are family, and when they’re fans too. Unfortunately, in Milwaukee, Mark Attanasio only shows up 2-3 times a year, for PR purposes, and won’t risk losing a dollar to go all-in, when the team is so close. As long as he holds Milwaukee fans hostage and doesn’t sell, there’s no hope.
They are at least in the most financially humble division where it’s not as big a deal if the various FO’s do a decent job.
No Cubs on list
How many teams payrolls are lower than the dodgers luxury tax bill this year?
I’d guess half the league minimum.
The article said 12.
16
Mariners – $166M
Orioles – $160M
Tigers – $155M
Cardinals – $144M
Royals – $138M
Twins – $136M
Rockies – $124M
Brewers – $123M
Reds – $119M
Nationals – $118M
Guardians – $102M
Pirates – $87M
White Sox – $85M
Rays – $79M
Athletics – $79M
Marlins – $70M
My numbers were from fangraphs so these could be inaccurate… but its still staggering
From the Article:
St. Louis – $153,544,320
Colorado – $146,730,542
Cincinnati – $144,256,289
Milwaukee – $143,503,166
Minnesota – $141,653,205
Washington – $133,693,002
Cleveland – $128,186,431
Athletics – $118,141,841
Pittsburgh – $108,626,221
Tampa Bay – $103,438,452
Chicago White Sox – $91,811,137
Miami – $86,926,975
A lot of those teams can pay more. Especially Mariners, Pirates, Rays, Marlins making double digit operating margins %.
Marlins are $18m above Ohtani’s deferments
“The Dodgers’ combined payroll and tax bill for the 2025 season lands north of $586MM. The two-time defending champions’ tax hit alone is higher than the payrolls of the bottom 12 teams in the league.” – quote by Anthony Franco, MLBTR, sportswriter
The article is long but actually isn’t a bad read….. I can provide a link if you need it and are interested
Can’t you read ?
I needed to find an Astros fan. I know I might be bringing up something infamous. But what do you think a good punishment for the Astros is?
The Dodgers tax bill is larger than half the teams’ PAYROLL… CRAZY. Dlags fly forever, I get it… but sheesh. Nuts.
Dlags AND flags fly forever, couldnt edit it haha
I mean, it’s paying off right now.
Besides the obvious imbalance that disparity creates and sullies the general collective permutation of the “equal playing field”… I’m not really complaining about anything.
It better. You’re a billion dollars in deferrals. You better win a championship every year next 10 years or you’re a failure.
When you’re running a 500 million payroll but only paying taxes ion 300 mill you better be wining it every year
You’re outspending everyone
You’re tax dodging the cbt penalties and reason the cbt exists in the first place by using deferrals to lower your tax bill
And you have 8 of the top 17 most deferrals on contracts while most teams have none
Huh, MLBTR Wrong Again
Made me laugh. What’s your name all about? Haha
It all started when they tried to tell us how to feel about the Ohtani contract and evolved into them constantly being wrong about the padres payrolls last 3 years
Ah. Carry on champ! Cheers 🍻
@Huh Deferrals are funded annually for future payouts with the principal needed to accrue to future payment. That principal is what it will ultimately cost the team and is also charged accordingly against the luxury tax.
Deferrals are for piece of mind for the player at a cost of the time value of $. As far as the luxury tax there is no advantage.
Idc if you defer a billion trillion dollars. The government operates on it and has forever for both Ds and Rs
That being said
If you agree to a 10 year 700 mill contract your tax bill should be 70 mill. You can “lower” your payroll obligations to 46 mill but for tax purposes it should be the aav for cbt purposes. Defer the entire contract idc pay him 0 dollars in payroll. But your tax bill better be reflect what you’re actually agreeing to.
Cause all deferrals do is lower the aav which lowers the tax hit. Without deferrals dodgers are running 500-600 mill in payroll alone. Agreeing to spend that much money but only be taxed at 300 mill payroll is why deferrals are ruining the sports. Undermines the entire reason we have a cbt and necessitates an actual salary cap reflective of where the league is not the dodgers Yankees Mets
Does that mean the Dodgers are essentially the notre dame of mlb ..paying teams to play them?
Lol 🤣🍻
Shame The Irish didn’t make the CFP, Bama shouldn’t have received the nod, imo.
More like Oregon Ducks alumni founder of Nike Phil Knight who said he’d spend stupid NIL money to win a title for the school.
Oddly enough both deferrals and NIL money need reigning in for the good of their respective sports long term
@Huh Deferrals are already covered in players union contract. They are funded and accounted for accordingly.
Fans being financially illiterate does not make them nefarious by default.
Agreeing to 500 – 600 mill in payroll obligations but only being taxed at 300 mil cause deferrals undermines why the cbt exists and is why a salary cap will be implemented.
“Financially illiterate” lmao. Your bank account is in the negative home shopping network. Sit this one out
Aloha bradduh, and the “elephant” in the room is that with the deferral loophole, la’s budget is really close to 500mil a year, their penalties would be over $200mil! They should also lose more draft picks and international bonus pool money. Manfred is so weak on certain issues. I don’t mean this towards la but for the whole league, this disparity is not helping. BTW even though I have Japanese heritage and lived there, I think all the restricted free agents from the NPB should be in our summer draft with other highschool and college players. Because the majority of those restricted players are late teens, early 20’s. That would have meant that Roki, Sho before him could not choose where they’d want to go but have to do like everyone else and spend their first many years with the organization that drafted them. La should not have had the best player in the draft, Roki get to sign with them, after they won the WS last year. I would have said the same had he signed with the Yankees, had they won. I hope the next CBA agreement deals with these issues. I’d also like to see a singing window for all free agents start after the WS and finish before the end of the year. 2027 could be a very interesting year for baseball! Mahalo!
Meant to say “signing” window, lol autocorrect! Mahalo
If only Manfred had been more authoritative in his punishment of the Astros vs a slap on the wrist for their cheating transgressions. The commissioner’s lack of appropriate action (not Manfred nor the office’s first time) prompted LA to go Godzilla and stomp Tokyo into oblivion. The hilarious thing is that LA is doing it legally. Had Manfred suspended the Astros from the postseason for three years AND stripped them of all draft picks for the same amount of time, then possibly things would be different. It’s almost always better/easier to beg for forgiveness than ask for permission and the Astros (relatively) got away with it. Manfred’s actions did NOT set a good example for future, not in the best interests of baseball scenarios.
@Dipthong.
I’m pretty sure you are a sour Dodgers fan. What’s your proposed punishment for the Astros scandal? The Red Sox?
You do realize the postseason involves extra money. The Astros will not comply with that. Also, a lot of the pitchers were innocent.
Aloha diphthong, absolutely agree with you. A friend and fan of la, were talking recently about that and how important it was then to discipline all the players involved in that scandal but remember, the commissioner as you know caved in to the player’s union and nothing was done. My la friend and I think that sent a team like the dodgers over the edge, they were doing everything to strengthen their organization and win a championship and had it stolen from them. I thought at the very least, Houston is stripped of the title. So LA says screw it, can’t win fairly so they just started buying up all the talent and Sho helped them with a deferral loophole and here we are today. Manfred has really hurt the game but many fans don’t care with short attention spans and money coming in… I never thought the bases would ever be adjusted, size wise. A gimmick to encourage more steal attempts. How about all facets of the game be used and players be taught smart base running instead of just swinging for the fences and not adjusting their approach at the plate. Don’t get me started, lol! Take care now. Mahalo
Doesn’t matter what MLB teams had been involved. To dissuade/discourage future and similar situations, commissioner’s office needed to bring the hammer and they brought a yardstick. Don’t be surprised when something like this reoccurs sometime soon. It’s a bit different (now) than punishing guys for gambling on the edges (or directly) when you’ve sold your soul to gambling concerns that permeate every web site, broadcast, et al for MLB. The gambling never should have been brought into the sport officially but those who(m) are guilty should have the book thrown at them, A year’s suspension ain’t changing as many minds about doing it as you think it is.
Again, agree with you, the toughest punishment should have been implemented so that that type of behavior doesn’t happen again. Manfred is weak. Mahalo
Some MLB teams get nearly $200 mil split between them. Wonder what is the cutoff for payouts? Is it ANY team that doesn’t exceed the tax threshold or some formula?
thong – The way it works, all 30 teams participate in equal revenue sharing, but the bigger market and bigger local revenue teams pay more than they receive while the smaller market teams with the lowest local revenue pay nothing.
Teams split national tv revenue. How the small market revenue receiving is spread out I have no idea. Also there is a 48% local tv money distribution.
Bring on the cap (and floor)!
I believe it will happen. Probably going to cost the fans most of if not all of the 2027 season.
Christmas morning came early for the Marlins’, White Sox’, Rays’, Pirates’, and A’s owners. They partying it up tonight!
What’s a dlag?
A deferred flag or just a Dodger thing?
I’m confused.
So… the Mets don’t receive draft pick compensation for losing Alonso. Anybody know the reason for that? (Key word there is “know”. Sorry to sound callous, but I’m not interested in random guesses)..
He was not given the QO. He had been QO’d last year and could not be QO’d again.
They gave him a QO last offseason. Can only get it once.
Geofft,
Alonso was previously tendered a QO after the 2024 season, so he was ineligible to receive one after this past season.
He could not receive a qualifying offer because he received one last year. Players can only receive one once in their careers. If a player does not receive one (for whatever reason), the team losing him is not entitled to draft compensation.
Look at all the welfare money the dodgers are paying to the other teams that are cheap. And somehow this is the dodgers problem?
Seriously.
Half goes to retirement fund. Who or what retired players are on this list? Certainly not players who exceed multi million dollar contracts?
Every player who makes 10 years of service time gets a pension. Part of their contracts and nothing wrong with it.
Ok, so it’s evenly distributed to every retired player or those who made more get less and those who made less are eligible for more?
I’m pretty sure it’s a set amount based on how long you played and when you start collecting. It’s pretty much like a regular pension…you start collecting when you’re about 65.
Evenly depending on each years amount paid into it.
$200 million a year for what must be no more than a few thousand retired players? That’s a big pool of money for someone to use or abuse. It would be great if the money was invested with Guggenheim Partners, It was mostly theirs to begin with, after all.
Yep, all members of the union (MLBPA). Retirement benefits are key to nearly all labor negotiations.
That amount split up between all the bottom teams doesn’t amount to a hill of beans for “competitive balance” considering the large local TV deals the payers are getting.
However, I do think they need to ensure the tax payout goes to the payroll since that was the whole idea to begin with.
Define bottom teams please. Is it anyone that didn’t make the playoffs AND exceed the luxury tax in a particular year? Is it payroll expenditures? Is it total $ profits or some red/black ratio?
$200M is significant. I would not say that does not amount to a hill of beans.
If you are splitting between 10, 12, 15 teams, it’s not. What’s an extra 20 million or less really getting you with the large market exploding salary structure? Do some basic math.
Some teams lost 20-40 million a year already the last two seasons due to the RSN fiasco. You think the revenue sharing helped them gain anything at all?
No need to attempt to be condescending. $20M nets you a significant player.
All the lower payroll teams get at least $200mil in revenue and merchandise sharing. It’s appalling to run a payroll lower than this.
Bring on the payroll floor.
All 30 teams are in the revenue sharing its just broken down by certain factors. No team is being paid 200 million.
Get rid of the luxury tax, implement a salary cap and a salary floor based on a percentage of revenue. Get rid of the qualifying offer and the caps on draft bonuses. Pay minor leaguers better and increase the MLB minimum. Bring back all my favorite players from my youth, and ban the Los Angeles Dodgers. Thank you for your attention in this matter.
@rhandome Oh man…cap and floor based on a percentage of income…that would spawn an entire generation of forensic accountants. The financial permutations, gymnastics and contortions the ownership groups would be enticed to hide…er…display.
To take it a step further, a percentage of net income!
Imagine there’s not payroll disparity, it’s easy if you try
Wonder where the Mariners sit on the list?
I wish the Astros would happily go over the luxury tax threshold, or rather extend their limits to the 281 million mark. I would like the Astros to set their limits at the 2nd threshold. But still, if you want to be cheap, you need a better farm.
Marlins are ruining baseball more than the Dodgers. Miami is a large market city and they are cheap as fück. Miami metropolitan has 6+ million people. Figure it out Sherman
What happens to the tax money ? What does MLB do with it
Woof, this continues its insane climb its only a matter of time before there is a salary cap