Although Major League Baseball does not have a hard salary cap, the competitive balance tax (CBT) is in place to both deter bigger market teams from spending at higher rates while also benefiting the smaller market clubs.
For clubs over by $20 to $40 million, they pay a 12% surcharge, for those $40 to $60 million over, they pay a 42.5% surcharge for the first year and 45% for each year after.
This is all relevant to the Los Angeles Dodgers because they were charged a significant luxury tax fee, in addition to their MLB-leading payroll.
The Dodgers were $116 million over the luxury tax threshold with their payroll, and because of being over more than three seasons, they were charged at the highest base.
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