MLB Luxury Tax Breakdown in New CBA
Posted by Pat Gallen, Wed, December 21, 2011 10:33 AM | | Comments: 0
Luxury Tax
Teams whose payrolls exceed set thresholds will be taxed on the portions above them:
- 2012-$178 million
- 2013-$178 million
- 2014-$189 million
- 2015-$189 million
- 2016-$189 million
For 2012 only, there are transition rates:
- 1st time over threshold: 20 percent
- 2nd time over threshold: 30 percent
- Third or subsequent time over threshold: 42.5 percent
The following tax rates apply: starting in 2013:
- 1st time over threshold: 17.5 percent
- 2nd time over threshold: 30 percent
- 3rd time over threshold: 40 percent
- 4th or subsequent times over threshold: 50 percent
- A team that does not pay tax in a year that goes over the threshold in a subsequent year pays at 17.5 percent.
Payrolls are for 40-man rosters and include averages of multiyear contracts; health and pension benefits; clubs medical costs; insurance; workman’s compensation, payroll, unemployment and Social Security taxes; spring training allowances; meal and tip money; All-Star game expenses; travel and moving expenses; postseason pay; and college scholarships.
