World Series champion Dodgers top MLB luxury tax at $103 million as record 9 teams owe penalty

NEW YORK — 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 World Series champion Dodgers will pay a tax for the fourth year in a row. The Dodgers' tax payroll of $353 million included $1,032,454 in non-cash compensation for Shohei Ohtani, whose contract calls for use of a suite for games at Dodger Stadium and an interpreter.

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 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.

More than $1 billion in taxes have been collected since the penalty started in 2003, with 15 teams paying $1.23 billion. The Yankees lead at $452 million, followed by the Dodgers at $350 million and the Mets.

Toronto, with a series of summer trades, cut its tax payroll to $233.9 million, under the $237 million threshold. The Blue Jays started the season projected at $244.3 million.

Chicago went just over the threshold at $239.85 million.

Among teams paying the tax, the Giants, Rangers and Cubs missed the playoffs.

Total spending on luxury tax payrolls rose 2.3% to $5.924 billion from $5.793 billion last year.

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 $237 million threshold, a 62% rate on the next $20 million, a 95% rate on the amount from $277 million to $297 million and a 110% amount above that.

The Braves and Rangers owe tax for the second year in a row and pay 30% on the first $20 million over and 42% on the next $20 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 Individual 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. For this year, the union and MLB agreed to allow discretionary fund distributions of up to $15 million each to teams whose local media revenue has declined since 2022 or 2023.

Next year's initial threshold is $241 million. If the Mets, Yankees, Dodgers, Phillies. Braves or Rangers go over, they would pay at the highest tax rate, rising to 110% for the amount over $301 million.

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