NEW YORK — The Los Angeles Dodgers will pay a record $169.4 million luxury tax after winning their second straight World Series title, raising their two-year total to $272.4 million.
The New York Mets have the second-highest tax assessment among the record-tying nine teams that pay at $91.6 million despite missing the 12-team playoffs, raising their tax owed to $320.3 million in the past four years under high-spending owner Steve Cohen.
The Dodgers will pay tax for the fifth consecutive season. Their total broke the previous high of $103 million they had set last year and overtook the New York Yankees for the first time in total tax since the penalty started in 2003, $519.4 million to $514.2 million.
Los Angeles’ $417.3 million tax payroll topped the previous record of $374.7 million by the 2023 Mets. The Dodgers’ total included $949,244 in noncash compensation for two-way star Shohei Ohtani, whose contract calls for use of a suite for games at Dodger Stadium and an interpreter.
The Mets’ payroll of $346.7 million included $369,886 in noncash compensation for Juan Soto, whose contract specified that the team will pay for his use of a luxury suite, up to four premium tickets and personal team security for the All-Star outfielder and his family. Soto finished with a record tax salary of $51,769,868 after earning $400,000 in award bonuses.
The Yankees owe $61.8 million, according to figures finalized Friday by Major League Baseball and the players’ association and obtained by The Associated Press. Then came Philadelphia ($56.1 million), American League champion Toronto ($13.6 million), San Diego (just under $7 million), Boston and Houston (both around $1.5 million), and Texas (about $190,000).
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Nine teams paying matches the record set in 2024, and the $402.6 million tax total topped the previous high of $311.3 million last year. Tax money is due to MLB by Jan. 21.
By cutting payroll with a series of deals ahead of the 2024 trade deadline and getting below that year’s threshold, the Blue Jays reset their tax rates and saved about $21 million this year. Had they been over the threshold for the third consecutive season, their tax bill would have risen to almost $34.65 million.
More than $1.63 billion in taxes has been assessed to 15 teams since the penalty started in 2003.
The Dodgers, Mets, Yankees and Phillies have paid tax in four straight seasons, with Philadelphia at $80.3 million surpassing Boston at $53.2 million for the fourth-highest total since 2003. San Diego is sixth at $49.5 million. The top four teams all exceeded the fourth threshold level, added in the 2022 labor contract and nicknamed the Cohen Tax in an initiative aimed at slowing his spending.
After paying tax in consecutive years, Atlanta dropped under the threshold at $234.8 million.
Among teams paying the tax, the Mets, Astros and Rangers missed the playoffs.
Miami had the lowest tax payroll at $86.9 million, about one-fifth the Dodgers’ total, and the Chicago White Sox were 29th at $91.8 million.
Total spending on luxury tax payrolls rose 2.3% for the second straight season, to $6.06 billion from $5.93 billion.
Tax payrolls are calculated by average annual values, including earned bonuses, for players on 40-man rosters along with just over $17 million per team for benefits and $1.67 million for each club’s share of the $50 million pool for pre-arbitration players that started in 2022. Deferred salaries and deferred bonus payments are discounted to present-day values.
Because they owe tax for three straight years, the Mets, Dodgers, Yankees and Phillies pay at 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 owes for the second year in a row and pays 30% on the amount over $241 million.
Boston, San Diego and Toronto pay a 20% rate on the amount over $241 million but less than $261 million, a 32% rate on the amount over $261 million but less than $281 million and a 62.5% rate on the amount over $281 million but less than $301 million.
The labor 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 player retirement accounts. The other 50% of what’s left is dedicated to a supplemental commissioner’s discretionary fund that is distributed among teams that are eligible to receive revenue-sharing money and have grown their non-media local revenue.
Next year’s initial threshold is $244 million. If the Dodgers, Mets, Yankees or Phillies go over, they will pay at the highest tax rate, rising to 110% for any amount over $304 million.
Regular payroll figures, which include 2025 salaries, prorated shares of signing bonuses and earned bonuses, have not been finalized.
