In a groundbreaking financial moment for Major League Baseball, the Los Angeles Dodgers are set to incur an astonishing competitive balance tax (CBT) of $169.4 million for the 2025 season, according to a report by the Associated Press. This hefty tax arises from an astronomical CBT payroll of $417.3 million, which stands as the highest in the league's history. The Dodgers, who have clinched the championship title two years in a row, are now boasting one of the priciest rosters ever assembled in baseball.
The CBT threshold for the year was established at $241 million. Teams that exceed this limit face escalating tax rates, particularly for those that consistently go over the threshold. As repeat offenders, the Dodgers find themselves subject to the steepest penalties, including a staggering 110% tax on every dollar spent beyond $301 million—a figure colloquially referred to as the "Steve Cohen tax," after the owner of the New York Mets who has also faced similar challenges.
It's important to understand that the CBT payroll is calculated based on the average annual value of player contracts rather than the actual salaries players receive each season. This year, the Dodgers' cash payroll is estimated at approximately $347.0 million. When you combine this cash payroll with their record CBT bill, the total expenditure for their championship roster in 2025 comes to around $516.4 million.
This season marked a notable occasion as nine teams found themselves paying the CBT. Here’s a breakdown of these teams along with their respective payrolls and tax bills:
| Team | CBT Payroll | CBT Bill |
|-------------|------------------|------------------|
| Dodgers | $417,341,608 | $169,375,768 |
| Mets | $346,670,456 | $91,637,501 |
| Yankees | $319,522,564 | $61,774,820 |
| Phillies | $314,329,912 | $56,062,903 |
| Blue Jays | $286,135,551 | $13,609,719 |
| Padres | $270,351,396 | $6,992,447 |
| Red Sox | $248,859,139 | $1,496,828 |
| Astros | $245,991,459 | $1,497,438 |
| Rangers | $241,380,966 | $190,483 |
Altogether, these tax payments amount to just under $403 million. According to Article XXIII(H) of the collective bargaining agreement, the initial $3.5 million of this total is allocated toward player benefits. Half of the remainder is directed into funding player retirement accounts, while the other half is distributed among teams that did not pay the CBT, overseen by Commissioner Rob Manfred and based on various factors, including local revenue growth.
Last season, the Dodgers had already set the record with a $103.0 million CBT bill for 2024, which they have now shattered. The only other team to surpass the nine-figure mark in CBT history is the Mets, who incurred a $100.8 million tax during their 2023 season. Remarkably, prior to 2023, no team had ever exceeded a CBT payment of $43.6 million in a single season, a record that has since been eclipsed multiple times from 2023 through 2025.
Interestingly, this massive tax bill comes on the heels of Dodgers' manager Dave Roberts expressing his support for the idea of a salary cap in MLB, suggesting that such a system should also include a minimum spending requirement to ensure lower-performing teams invest adequately in their rosters. As the current collective bargaining agreement approaches its expiration on December 1, 2026, there is increasing anticipation that MLB and its thirty team owners will push for the implementation of a salary cap.
