Nine Teams Exceeded Luxury Tax Threshold In 2025

Major League Baseball has finalized its calculations of teams’ competitive balance tax payrolls for the 2025 season. As first reported by The Associated Press, nine teams surpassed the $241MM base threshold. In a separate post, The AP lists the finalized CBT numbers for all 30 teams.

The payments are as follows:

• Dodgers: $169.4MM
• Mets: $91.6MM
• Yankees: $61.8MM
• Phillies: $56.1MM
• Blue Jays: $13.6MM
• Padres: $7MM
• Astros: $1.5MM
• Red Sox: $1.5MM
• Rangers: $190K

Teams pay escalating penalties for exceeding the threshold in consecutive seasons. The Dodgers, Mets, Yankees, Phillies and Rangers have all paid the tax in at least three straight years — subjecting them to the highest escalator fees. The Astros went over the line for the second straight season. The Blue Jays, Padres and Red Sox had gotten below in 2024 and are categorized as first-time payors.

This is the second straight year in which nine teams paid the CBT. The Braves, Giants and Cubs had gone over the line in ’24 but dipped below this year, which resets their status going into 2026. Atlanta’s active offseason puts them in position to go back into tax territory next year, when the base threshold climbs to $244MM. San Francisco and Chicago each have projected CBT numbers more than $40MM below that right now.

While public estimates from RosterResource and Cot’s Baseball Contracts offer an excellent approximation of teams’ payroll commitments, the official numbers are not available during the season. It’s not uncommon for rounding errors in those calculations to vary by a few million dollars. That generally isn’t a big deal but can matter for teams that are hovering very close to the tax line. Each of the Red Sox ($249MM payroll), Astros ($246MM) and Rangers ($241.38MM) were believed to have gone narrowly beyond the $241MM cutoff, but that wasn’t 100% established until this evening — particularly in the case of Texas.

The Dodgers ($417MM), Mets ($347MM), Yankees ($320MM), Phillies ($314MM) and Blue Jays ($286MM) all had payrolls above $281MM. That was the third tier of penalization and marked the point at which a team’s top draft pick is dropped by 10 spots. The Mets were the only of those five that didn’t make the playoffs. Their top pick drops from 17th to 27th. The Yankees, Philadelphia, Toronto and L.A. all have their first-round pick dropped to between 35th and 40th.

Teams that paid the CBT are entitled to the lowest level of compensation for losing free agents who declined a qualifying offer. They receive a draft choice after the fourth round for each qualified free agent who walks. They’re charged the heaviest penalty — their second- and fifth-highest picks in 2026 and $1MM from their ’27 international bonus pool — for signing a qualified free agent from another team.

San Diego and the Mets receive a pick after the fourth round for losing Dylan Cease and Edwin Díaz, respectively. Toronto (Bo Bichette), Houston (Framber Valdez) and Philadelphia (Ranger Suárez) would receive the same if their free agents sign elsewhere. The Dodgers surrendered their second- and fifth-round selections for Díaz. Toronto is slated to do the same for Cease, but if Bichette walks, they’d give up that compensatory pick instead and get their fifth-rounder back.

The Dodgers’ combined payroll and tax bill for the 2025 season lands north of $586MM. The two-time defending champions’ tax hit alone is higher than the payrolls of the bottom 12 teams in the league. There were 14 clubs that had a CBT number above $200MM. The Braves, Cubs, Giants, Angels, Diamondbacks and Mariners were the other six teams above the median. All but Seattle spent more than $200MM.

On the other end, the Marlins ($87MM) and White Sox ($92MM) were the two teams with payrolls below $100MM. The Rays ($103MM), Pirates ($109MM) and Athletics ($118MM) rounded out the bottom five — followed by the Guardians, Nationals, Twins, Brewers and Reds.

Overall, the league will collect just under $403MM in taxes. Teams must make the payments by January 21. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams.