Dodgers hit with record-breaking luxury tax bill
The Los Angeles Dodgers are two-time defending champions and boast a huge payroll, by far the largest in MLB.
With three World Series triumphs in six seasons the Los Angeles Dodgers have built a dynasty. At the same time, they have built an enormous payroll and will have to foot the largest luxury tax bill in MLB history.
The Associated Press reports that the Dodgers will have to pay a competitive balance tax (CBT) of $169.4 million for the 2025 season, the biggest in MLB history. The team’s $417.3 million CBT payroll far exceed the upper threshold of $241 million.
The MLB attempts to maintain a relatively level playing field by forcing big-spending teams to pay a ‘tax’ to the league. The further above the threshold a team finds itself, the higher the rate of tax that it is liable for. Teams that are required to pay CBT in consecutive seasons are also subject to additional financial penalties.
The Dodgers’ spending is so great that they were hit with the highest tax rates, including a huge 110% tax on every payroll dollar spent over $301 million.
The CBT payroll figures are based on the average annual value of players’ contract, not on the amount that players will actually receive that season. CBS Sports reports that the Dodgers actual cash outlay for 2025 was around $347 million.
Nine MLB teams will be required to pay CBT for the 2025 season, the joint-most in league history. Alongside the Dodgers, those teams are Mets, Yankees, Phillies, Blue Jays, Padres, Red Sox, Astros and Rangers.
The previous CBT record came last year, which was also set by the Los Angeles Dodgers. The 2024 Dodgers were hit with a $103.0 million CBT bill as they clinched the World Series.
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