NEW YORK — Los Angeles Dodgers will pay a record $169.4 million luxury tax after winning a second straight World Series title, raising their two-year tax bill to $272.4 million.
The New York Mets have the second-highest tax bill among a record nine teams, paying $91.6 million despite missing the 12-team playoffs, causing their tax bill to balloon to $320.3 million over the past four years under high-spending owner Steve Cohen.
The Dodgers will pay the tax for the fifth straight season. Their total surpassed the previous high of $103 million they set last year and surpassed the New York Yankees for the first time since the fine was introduced in 2003, $519.4 million to $514.2 million.
Los Angeles' tax bill of $417.3 million topped the Mets' previous 2023 record of $374.7 million. The Dodgers' total included $949,244 in non-cash compensation for two-way star Shohei Ohtani, whose contract includes the use of the Dodger Stadium game facility and an interpreter.
The Mets' $346.7 million payroll included $369,886 in non-cash compensation for Juan Soto, whose contract stated the team would pay for his use of a luxury suite, up to four award tickets and personal team security for the star outfielder and his family. Soto finished with a record tax pay of $51,769,868 after receiving $400,000 in bonuses.
The Yankees are owed $61.8 million, according to figures finalized Friday by Major League Baseball and the Players Association and obtained by The Associated Press. They are followed by Philadelphia ($56.1 million), Alabama 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 paid a record, and the total tax bill of $402.6 million topped the previous high of $311.3 million last year. The tax money must be paid to MLB by Jan. 21.
By cutting payroll through a series of deals before the 2024 trade deadline and falling below this year's cap, the Blue Jays reset their tax rates to zero and saved about $21 million this year. If they were to exceed that threshold for a third straight season, their tax bills would rise to nearly $34.65 million.
Since the fine was introduced in 2003, 15 teams have been assessed more than $1.63 billion in taxes.
The Dodgers, Mets, Yankees and Phillies have paid taxes for four straight seasons, with Philadelphia's $80.3 million beating Boston's $53.2 million for the fourth-highest total since 2003. San Diego ranks sixth with $49.5 million. The top four teams all exceeded a fourth threshold added to the 2022 labor contract, dubbed the “Cohen tax,” as part of an initiative aimed at slowing his spending.
After paying taxes for several years in a row, Atlanta fell below the $234.8 million threshold.
Among the 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 of the Dodgers' total, while the Chicago White Sox came in 29th at $91.8 million.
Total luxury tax spending rose 2.3% for the second straight season to $6.06 billion from $5.93 billion.
Payroll taxes are calculated using annual averages, including bonuses earned, for players on 40-man rosters, plus just over $17 million per team for incentives and $1.67 million for each club's share of the $50 million pool for players before arbitration, which began in 2022. Deferred salaries and deferred bonus payments are discounted to today's values.
Because they must pay taxes for three consecutive years, the Mets, Dodgers, Yankees and Phillies pay a 50 percent rate on the first $20 million above the $241 million threshold, a 62 percent rate on the next $20 million, a 95 percent rate on $281 million to $301 million, and a 110 percent rate above that threshold.
Houston fell into debt for the second year in a row and paid 30 percent of the more than $241 million.
Boston, San Diego and Toronto pay a 20 per cent rate on more than $241 million but less than $261 million, a 32 per cent rate on more than $261 million but less than $281 million and a 62.5 per cent rate on more than $281 million but less than $301 million.
The labor agreement stipulates that the first $3.5 million of tax money will be used to fund player benefits and 50 percent of the remainder will be used to fund players' individual retirement accounts. The remaining 50 percent of the remaining amount goes into the commissioner's supplemental discretionary fund, which is distributed to teams that are eligible to receive revenue money and have increased their local non-media revenues.
The initial threshold for next year is $244 million. If the Dodgers, Mets, Yankees or Phillies lose, they will pay the highest tax rate, which increases to 110 percent on amounts over $304 million.
Regular payroll data, which includes 2025 salaries, prorated shares of signing bonuses and earned bonuses, has not yet been finalized.
