Money doesn't buy happiness, but in baseball, it sure buys a lot of wins. Or at least, that’s what the New York Mets and Los Angeles Dodgers want you to believe. If you’ve spent any time looking at major league baseball payrolls by year, you’ve probably noticed the numbers aren't just high—they’re kind of exploding. We aren't in the $100 million era anymore. Honestly, $100 million is basically the floor for a team that actually wants to compete these days.
In 2025, the total league spending on player salaries hit a staggering $5.16 billion. To put that into perspective, back in 1993, the entire league combined spent about $856 million. That is a massive jump. We’re talking about a sport where one guy, Shohei Ohtani, signed a deal worth $700 million. Yeah, most of it is deferred, but it’s still a number that would have been unthinkable even a decade ago.
The Era of the Super-Spender
Since Steve Cohen bought the Mets in late 2020, he’s basically treated the luxury tax like a suggestion rather than a deterrent. In 2024, the Mets set a regular payroll record of $333.3 million. When you add the luxury tax penalties on top of that, their total cost for the season was over $430 million. That is wild. For context, teams like the Oakland Athletics (now the Sacramento Athletics, temporarily) and the Miami Marlins often struggle to crack the $70 million or $80 million mark for their entire roster.
The gap between the "haves" and "have-nots" has never felt wider. In 2025, the Dodgers finished with the highest payroll in the sport at roughly $350 million. They also paid a record-breaking $169.4 million in luxury taxes alone. Think about that for a second. The Dodgers' tax bill was higher than the entire active payroll of about 20 other MLB teams.
Major League Baseball Payrolls by Year: A 30-Year Snapshot
If you look back at the historical data, the trajectory is almost a straight line up, with a few dips during strike years or the 2020 pandemic.
In the mid-90s, a $50 million payroll was elite. The 1996 Yankees won the World Series with a payroll of about $52 million. Fast forward to 2005, and the Yankees had crossed the $200 million threshold for the first time. They stayed in that stratosphere alone for years while other teams like the Rays and Pirates were hovering around $30 million.
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By 2015, the Dodgers took the "big spender" crown with a $230 million payroll. But the real shift happened after the 2022 Collective Bargaining Agreement (CBA). The league introduced the "Steve Cohen Tax"—a fourth tier of the Competitive Balance Tax (CBT) specifically designed to penalize owners who spend way past the normal limits.
Here is how the top of the mountain looked for 2025:
The Los Angeles Dodgers led the way with a CBT payroll of $417.3 million. Right behind them were the New York Mets at $346.7 million. The Yankees and Phillies weren't far back, both clearing the $310 million mark. Meanwhile, at the bottom of the pile, the Miami Marlins were operating with about $87 million, and the Athletics were even lower at $75 million.
Does Spending More Actually Work?
It’s the million-dollar question. Well, the billion-dollar question.
Spending doesn't guarantee a ring, but it gets you to the party. In 2025, nine teams paid the luxury tax. Most of them made the playoffs. The Dodgers won the World Series in 2024 and 2025, proving that if you have deep pockets and a smart front office, you’re basically unstoppable.
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But then you have the 2023 Mets. They spent more than anyone in history at the time and didn't even make the postseason. They ended up trading Max Scherzer and Justin Verlander just to recoup some prospect capital. It was a disaster.
Then there are the "efficiency" kings. The Tampa Bay Rays and Milwaukee Brewers are famous for winning 90+ games with payrolls that would barely cover the Yankees' infield. In 2024, the Brewers won the NL Central with a payroll around $115 million, while the Cardinals spent significantly more and finished behind them.
Understanding the "Tax" Problem
When we talk about major league baseball payrolls by year, we have to talk about the CBT. It isn't a hard salary cap like the NFL or NBA. Teams can spend whatever they want, but if they go over the threshold—which was $241 million in 2025—they have to pay a percentage of the overage back to the league.
- First-time offenders pay a 20% tax on the excess.
- Second consecutive years, it jumps to 30%.
- Third year or more, you're looking at a 50% hit.
And it gets worse. If you go $60 million or more over the cap, you pay a 60% surcharge and your top draft pick gets moved back 10 spots. That is why most teams try to "reset" their tax every few years by dipping under the line for one season.
Looking Ahead to 2026 and Beyond
The CBT threshold is set to rise to $244 million in 2026. This will be the final year of the current CBA. Expect a massive fight between the owners and the players' union when the next deal is negotiated. Owners want a hard salary cap to keep costs down, while players want to keep the current system because it allows for these massive $300 million contracts.
If you're a fan of a small-market team like the Guardians or the Royals, the trend of major league baseball payrolls by year might feel depressing. But there is a silver lining. The league shares a lot of the luxury tax revenue with the smaller teams. In theory, that money is supposed to go back into player salaries, though some owners are definitely better at that than others.
Actionable Insights for Fans and Analysts
If you want to track how your team is doing or predict their next move, keep these things in mind:
- Watch the "Reset" Year: If your team has been over the luxury tax for two years, expect a "quiet" offseason in year three. They are likely trying to reset their tax penalty back to 20%.
- AAV vs. Cash: Payroll isn't just the checks written this year. The luxury tax is calculated based on Average Annual Value (AAV). A 10-year, $300 million deal counts as $30 million every year, even if the player only gets $10 million in cash this season.
- The "Cohen" Factor: Check if your owner is a "Sportsman" owner (who cares about winning more than profit) or a "Business" owner. It determines whether that $244 million threshold is a ceiling or just a suggestion.
To get the most accurate, up-to-the-minute data on your specific team, you should regularly check resources like Spotrac or Cot's Baseball Contracts. They break down the "hidden" costs like player benefits and pre-arbitration bonus pools that usually add about $20 million to the base salary numbers you see in the headlines.