The final 2024 payrolls for all 30 Major League Baseball teams have been published, revealing the amounts subject to the luxury tax as outlined by the league’s collective bargaining agreement. These payrolls cover the 40-man rosters of each team and encompass various financial elements, such as player contracts, benefits, and team expenses.
The payroll data includes the average annual values (AAV) of player contracts as well as contributions for benefits and extended benefits. These benefits include health and pension costs, insurance, workers’ compensation, taxes, spring training allowances, and postseason pay. The total amount of benefits for each team is $17,028,816, which accounts for costs such as All-Star game expenses, travel, moving allowances, and even college scholarships. Additionally, teams contribute to a pre-arbitration bonus pool, which amounts to $1,666,667.
A luxury tax is triggered when a team’s payroll exceeds $237 million, with incremental tax rates applied as the payroll surpasses the threshold. Teams exceeding this mark, including the Los Angeles Dodgers, New York Mets, New York Yankees, and Philadelphia Phillies, are subject to progressively higher tax rates.
For payrolls exceeding $237 million but less than $257 million, the tax rate stands at 50%. If payrolls fall between $257 million and $277 million, the tax rate rises to 62%. For amounts exceeding $277 million but below $297 million, teams face a 95% rate, with a 110% tax rate applied for payrolls above $297 million.
Teams like the Atlanta Braves and Texas Rangers, who exceeded the threshold for the second consecutive season, face a 30% tax rate for payrolls between $237 million and $257 million, and a 42% rate for amounts above $257 million but under $277 million.
Other teams, such as the Houston Astros, San Francisco Giants, and Chicago Cubs, are taxed at a lower rate of 20% for payrolls between $237 million and $257 million, with a 32% rate for payrolls exceeding $257 million but below $277 million.
Both the Philadelphia Phillies and Atlanta Braves received tax credits, with the Phillies receiving a $182,809 credit and the Braves receiving a $14,000 credit. These credits are based on specific provisions outlined in the MLB’s Basic Agreement.
This comprehensive breakdown of payrolls provides valuable insight into the financial dynamics of Major League Baseball teams, highlighting the financial impact of the luxury tax system. As MLB continues to balance competitive equity with financial flexibility, the luxury tax remains a significant factor shaping the financial strategies of teams across the league. For further insights into MLB’s financial structures and tax implications, visit the MLB Players Association.
