The competitive balance tax threshold for the 2024 MLB season was set at $237 million, which represented an all-time high.
The Los Angeles Dodgers exceeded the luxury tax threshold for the fourth consecutive year with a $353 million payroll and are paying an overage penalty of $103 million.
According to Ronald Blum of the Associated Press, the Dodgers and New York Mets were among an MLB record nine teams to go over the luxury tax threshold for the 2024 season:
The Los Angeles Dodgers topped a record nine teams owing Major League Baseball’s luxury tax this year with an unprecedented $103 million penalty, and the $97.1 million bill for the New York Mets raises their tax total under high-spending owner Steve Cohen to nearly $229 million.
The New York Yankees, Philadelphia Phillies, Atlanta Braves, Texas Rangers, Houston Astros, San Francisco Giants and Chicago Cubs also exceeded the luxury tax threshold in 2024:
The Yankees owe $62.5 million, according to figures finalized Friday by Major League Baseball and the players’ association and obtained by The Associated Press. They were followed by Philadelphia ($14.4 million), Atlanta ($14 million), Texas ($10.8 million), Houston ($6.5 million), San Francisco ($2.4 million) and the Chicago Cubs ($570,000).
The nine teams paid a combined $311.3 million in taxes, which surpassed the previous high of $209.8 million set last year:
The total tax of $311.3 million topped the previous high of $209.8 million last year, when eight teams paid. Tax money is due to MLB by Jan. 21.
First-time offenders pay a 20% tax on all overages, and that increases to 30% in the second year and 50% in following years.
For clubs over by $20 to $40 million, they pay a 12% surcharge, for those $40 to $60 million over, they pay a 42.5% surcharge for the first year and 45% for each year after, and those $60 million or more over have a 60% surcharge.
In addition, clubs that are $40 million or more above the threshold have their highest selection in the next draft moved back 10 places unless the pick falls in the top six. In that case, the team has its second-highest selection moved back 10 places instead.
Dodgers calculations for MLB luxury tax bill
The Dodgers were $116 million over the luxury tax threshold with their payroll, and because of being over more than three seasons, they were charged at the highest base level of 50%.
However, because they were also over the threshold by more than $60 million, they ended up paying the extra surcharges, which results in a 50% rate on the first $20 million above the threshold, a 62% rate on the next $20 million, a 95% rate on the amount from $277 million to $297 million and a 110% on the total above $297 million.
The Dodgers total would have been higher if not for their unprecedented deferrals, which have saved them significant amounts and thus allowing them to continue spending.
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