In a headline-making moment for baseball and the business of the sport, the Los Angeles Dodgers will pay a record $169.4 million in luxury tax after clinching their second straight World Series title. The payment brings the team’s two-year tax bill to $272.4 million, a figure that eclipses the previous high of $103 million set last year and overtakes the New York Yankees for the first time in the tax’s history.
Dodgers’ Tax Record and Payroll
Los Angeles’ payroll for the 2025 season totaled $417.3 million, topping the prior record of $374.7 million held by the 2023 Mets. The Dodgers’ payroll included $949,244 in non-cash compensation for two-way star Shohei Ohtani. Ohtani’s contract requires the team to provide a suite for games at Dodger Stadium, an interpreter, and other benefits.
The tax itself is calculated on the average annual value of player salaries, bonuses, and benefits. For teams that owe tax for three consecutive years-such as the Dodgers, Mets, Yankees, and Phillies-the rates are 50 % on the first $20 million above the $241 million threshold, 62 % on the next $20 million, 95 % on the amount from $281 million to $301 million, and 110 % on any amount above $301 million.
Mets and Other Big-Spenders
The New York Mets, who missed the 12-team playoffs, are the second-highest tax assessment at $91.6 million. Their $346.7 million payroll included $369,886 in non-cash compensation for Juan Soto, who receives a luxury suite, up to four premium tickets, and personal security for himself and his family. Soto earned a record tax salary of $51,769,868 after a $400,000 award bonus.
Other teams with significant tax burdens include the Yankees ($61.8 million), Philadelphia ($56.1 million), Toronto ($13.6 million), San Diego (just under $7 million), Boston and Houston (both around $1.5 million), and Texas (about $190,000). Nine teams paid tax in the 2025 season, matching the record set in 2024 with a $402.6 million total tax, up from the previous high of $311.3 million.
Tax Mechanics and Future Thresholds
Tax money is due to Major League Baseball by January 21. The labor contract stipulates that the first $3.5 million of tax revenue funds player benefits, while 50 % of the remainder goes to player Individual Retirement Accounts. The other 50 % supports a supplemental commissioner discretionary fund that is distributed to teams eligible for revenue-sharing money and that have increased their non-media local revenue.
For the next season, the initial threshold will rise to $244 million. If the Dodgers, Mets, Yankees, or Phillies exceed that amount, they would pay the highest rate-110 % on any amount over $304 million.
Other Teams and Payroll Trends
The Blue Jays cut payroll with a series of deals ahead of the 2024 trade deadline, resetting their tax rates and saving about $21 million this year. Had they remained above the threshold for a third consecutive season, their tax bill would have risen to almost $34.65 million.
Since the penalty began in 2003, more than $1.63 billion in taxes have been assessed to 15 teams. The Dodgers, Mets, Yankees, and Phillies have paid tax for four straight seasons. Philadelphia’s $80.3 million surpassed Boston’s $53.2 million for the fourth-highest total since 2003, with San Diego at sixth with $49.5 million.
Teams such as Houston (second year in a row) pay 30 % on amounts over $241 million. Boston, San Diego, and Toronto pay 20 % on amounts over $241 million but less than $261 million, 32 % on amounts over $261 million but less than $281 million, and 62.5 % on amounts over $281 million but less than $301 million.
The Miami Marlins had the lowest tax payroll at $86.9 million, about one-fifth of the Dodgers’ total, while the Chicago White Sox ranked 29th with $91.8 million.
Key Takeaways
- Los Angeles Dodgers will pay a record $169.4 million in luxury tax after winning back-to-back World Series titles, raising their two-year tax bill to $272.4 million.
- The Mets, despite missing the playoffs, are second-highest in tax assessment at $91.6 million, with a payroll of $346.7 million.
- Nine teams paid tax in 2025, matching the record set in 2024 with a $402.6 million total tax.
The Dodgers’ record payment underscores the escalating costs of building championship teams and the growing impact of the luxury tax on Major League Baseball’s financial landscape.
