The Dodgers paid the cost for their success in 2024.
The World Series champions topped Major League Baseball with a $353 million payroll and a $103 million bill for exceeding the Competitive Balance Tax threshold. In both cases, the New York Mets were a close second – a $347.15 million payroll and $97.12 million luxury tax bill.
The Dodgers’ payroll (and luxury tax) would have been much higher if not for deferred salaries included in several contracts (most notably Shohei Ohtani’s). The deferred salaries lower the average-annual value of those contracts as figured for CBT purposes.
A record nine teams topped the CBT threshold in 2024 with payrolls higher than $237 million – the Dodgers, Mets, New York Yankees ($316.2 million), Atlanta Braves ($276.144 million), Texas Rangers ($268.445 million), Houston Astros ($264.759 million), Philadelphia Phillies ($264.314 million), San Francisco Giants ($249.1 million) and Chicago Cubs ($239.85 million).
The nine teams will pay more than $310 million in luxury tax penalties with a small portion of the money going to funding player benefits and the majority going to lower-revenue teams. Six of the nine, however, made the playoffs in 2024.
The Dodgers have exceeded the CBT threshold nine times in the past 12 seasons, including each of the past four, and have paid a total of $312.5 million in luxury tax penalties over that time.
The Dodgers, Mets, Yankees and Phillies were taxed at a base rate of 50% because they’ve been over the tax in three or more consecutive years. The Braves and Rangers exceeded the threshold for the second consecutive year, earning a 30% tax rate. The Astros, Giants and Cubs were first-time offenders, earning a 20% tax on overages.
If a team dips below the threshold in any one season, its tax rate resets to 20%.
Because 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 at the maximum 110%.
A team’s CBT figure is determined using the average annual value of the contract of each player on the 40-man roster, plus any additional player benefits. Every team’s final CBT figure is calculated at the end of each season.
Teams were notified of their luxury tax bills earlier this month and must pay in January.
