A record nine MLB teams exceeded the luxury tax threshold for 2024, resulting in a staggering $311 million paid in penalties, led by the Dodgers and Mets.
The Dodgers, Mets, Yankees, and Phillies each faced a 110% marginal tax rate for going over the threshold, while other teams faced lower rates based on consecutive years of overages.
The Competitive Balance Tax (CBT) impacts how teams manage their payroll, with penalties increasing for those who exceed the threshold multiple years in a row.
Teams must consider the CBT when constructing their rosters, with the final CBT figure based on the average annual value of player contracts, plus benefits.
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