The competitive balance threshold is supposed to tug big payroll clubs back toward the pack. These 7 teams treat it more like a toll booth they roll through on the way to October.
The competitive balance threshold is the soft line that Major League Baseball uses to rein in the biggest payrolls. The idea sounds simple. Set a number, tax the clubs that blow past it, and maybe they think twice before stacking one more expensive star. In practice, the same small group of heavyweights keeps pushing over the line, accepting the competitive balance tax as part of the bill for chasing a title.
This list looks at the 7 teams most likely to keep treating the competitive balance threshold as a cost of doing business through the current CBA. We are talking about organizations that already live near or above the line, have owners who say they will spend, and sit on revenue streams that make those tax checks possible.
Context: Why The Competitive Balance Threshold Matters
The competitive balance tax sits where a hard cap would be in other leagues. Each year MLB sets a payroll number for tax purposes. When a club’s competitive balance payroll passes that threshold, every extra dollar gets taxed at rates that jump for repeat offenders.
Under the current agreement, the first threshold climbed from 233 million in 2023 to 237 million in 2024 and will rise to 241 million in 2025 and 244 million in 2026. A first year payer hands over 20 percent on the overage. A second year payer owes 30 percent. At 3 straight seasons or more that rate jumps to 50 percent, with extra surcharges for clubs that blow past higher tiers.
The 7 clubs below already live near the line or over it. Their revenue, their long commitments, and their public comments all suggest they will keep flirting with those tax tiers as long as they see a path to deep postseason runs.
Methodology: Rankings draw on MLBs official competitive balance tax rules, tax payment summaries, and Cots, Fangraphs RosterResource, and Spotrac payroll projections, weighted toward multi year tax history, current and projected payroll relative to the threshold, market size and media revenue, and public comments about spending, with close calls broken by near term contract obligations and competitive window.
The Teams That Live Over The Line
1. Dodgers And The Competitive Balance Threshold Ceiling
If you want a single moment that sums up the Dodgers relationship with the competitive balance threshold, picture the winter they signed Shohei Ohtani and then kept spending. That offseason pushed their projected competitive balance payroll for 2025 up over 375 million, with one estimate putting total payroll plus tax near 525 million.
Behind the scenes, the Ohtani deal itself shows how deeply they work the system. The contract headline number is enormous, but the structure uses heavy deferrals that lower the hit on their competitive balance payroll in the short term while still landing the biggest star in the sport. When you own a major stake in your regional sports network and sit in the top tier of global baseball brands, you can design contracts that treat the tax as another line on a long spreadsheet.
I have watched their roster building under this CBA and it feels like they view the first threshold the way other clubs view the league minimum. As a starting point. That combination of revenue, proven willingness to pay record tax bills, and public comfort with the image makes the Dodgers the clearest bet to live over the competitive balance threshold for as long as this agreement lasts.
2. Mets Live Above The Competitive Balance Threshold
If you want sound, not just numbers, think back to the winter when people started calling the highest tax tier the Cohen Tax. That label arrived because the Mets owner spent so aggressively that a new tax level around 290 million was effectively tailored to his payroll.
On paper, the Mets are not far behind the Dodgers. Their 2023 tax payroll came in a little under 375 million, which produced a luxury tax bill of almost 101 million, both records at the time. Projections for 2026 already have their competitive balance payroll in the mid 250s, above the first threshold of 244 million before a single big addition this winter.
The human part here is interesting. Cohen wrote a public apology to fans after a late season collapse in 2025, and he did it while operating a payroll around 340 million. Fans in Queens now treat a top 3 payroll as the baseline, not a dream. When your owner is on record saying that avoiding the tax “is not a goal” and your recent past includes paying more in tax than some clubs pay in salary, a reset season still lives near the first threshold.
Maybe I am reading too much into his interviews, but it feels like Cohen sees competitive balance threshold lines as speed bumps. He might ease off the gas for a year to reset his tax rate. Then he will floor it again when a star he wants reaches the market.
3. Yankees Treat Competitive Balance Threshold As Cost
You do not need a spreadsheet to understand the Yankees and the competitive balance threshold. You can hear it every time the Bronx crowd boos a flat season. Expectations come with price tags there.
Here is what that looks like inside the building. Long contracts for Aaron Judge and Gerrit Cole sit on the books deep into this decade. New money for other stars has to layer on top of that. The club also owns a piece of its regional sports network and still pulls serious gate revenue. Yankees fans can hate a quiet trade deadline. They rarely watch ownership slash payroll just to duck the tax unless the roster feels stale.
I have watched enough Yankee winters to know the pattern. A bad year usually leads to a reckoning, some firmer talk about discipline, then a signing or trade that pushes them back over the line. That is why they sit behind only the Dodgers and Mets on this list.
4. Phillies Spend Past The Line
The defining moment for the Phillies in this conversation is an owner quote that will probably follow the franchise for as long as this CBA exists.
From the outside, you can feel how that attitude seeps into the fan base. Phillies fans pack a park that now expects deep runs, not quiet contention. When the club reached the World Series and then retooled instead of retrenching, it sent a message. This front office will keep stacking cost on cost as long as the core feels in its prime.
Look at it this way. A club that is already a second year tax payer, sitting 20 to 30 million above the line and comfortable with that hit, does not suddenly pivot to small market restraint. Not while the rotation and lineup still look like they can overrun October.
5. Padres Push Payroll Toward Tax
The Padres story around the competitive balance threshold feels almost emotional. You had an owner in Peter Seidler who openly said he was willing to spend big for a parade in San Diego and asked out loud whether that celebration would be on land or on water or on both.
On the books, their recent path is complicated but still loud. The Padres paid the tax in 2022 and 2023, including a 2023 bill of roughly 39.7 million, one of the largest in the league. Their competitive balance payroll peaked above 250 million in that stretch. Then the club hit a wall with regional sports network revenue, took out a 50 million loan to cover obligations, and slashed payroll by about 35 percent for 2024.
Inside the clubhouse, you still have expensive long deals for Manny Machado, Xander Bogaerts, and Fernando Tatis Jr, along with the memory of an owner who promised that “one year soon, the baseball gods will smile on the San Diego Padres and we will have a parade.” I have watched that quote circulate among Padres fans so many times that it feels like a mission statement.
Yes, new financial realities and leadership shifts might nudge the club to stay just under the line in a given year. But when your present includes a recent tax bill in the high 30s and your near future projections already sit within 10 or 15 million of the threshold before big moves, you are still one aggressive winter away from living over the line again. That keeps the Padres on this list, even with more uncertainty than the clubs above them.
6. Blue Jays Approach Soft Cap
The Blue Jays are a little quieter about it, yet their relationship with the competitive balance threshold has tightened in this window. In 2023 they pushed their tax payroll high enough to owe a bill of around 5.5 million. Then in 2024 they maneuvered just under the threshold near 237 million to reset their payer status.
From a pure numbers angle, they sit right on the edge of being a regular tax club. Their recent tax bill may look modest compared to Mets or Padres, but their payroll trends tell another story. They have lived around the top 10 in tax payroll, and current estimates put their 2026 total payroll near the 190 level with room to climb if they keep their core together. One industry projection for 2026 says they will again rank among the top 7 in payroll, sandwiched between clubs like Yankees and Phillies.
From a human angle, you can feel how this lands with fans. A long term extension for Vladimir Guerrero Jr at 14 years and 500 million would not even be on the table without ownership accepting a competitive balance payroll that brushes up against the line for years. Jays fans see full houses in a renovated park and a star core, and they expect ownership to behave more like a coastal heavyweight than a cautious mid tier club.
I keep coming back to this. A team that has already written one tax check, reset by a hair the next season, and now leans on new building revenue is not going to treat the threshold as a brick wall. It is a soft cap they will cross again when the roster screams for one more arm or bat.
7. Red Sox Play With Fire
The Red Sox have bounced on both sides of the competitive balance threshold for years, which is exactly why they still belong here. Their recent pattern looks like this. Pay tax in 2018 and 2019 with one of the highest payrolls in the sport, duck under for a bit, then climb back over when the front office decides the window demands another push.
The current cycle has them trending up again. Boston exceeded the threshold in 2022, dipped below in 2023 and 2024, then pushed back over in 2025 with an estimated tax payroll around 246.5 million against a 241 million line. Early reporting this winter says they are prepared to operate as at least a first tier payer again, with 2026 competitive balance payroll projections already over 219 million and major decisions still ahead.
From the stands, Red Sox fans judge ownership as much on commitment as on outcome. They watched the club trade Mookie Betts in part to reset and hated how that felt.Now, when rumors fly about pushing back over the threshold to support a new core, the mood in New England leans toward “finally.”
Maybe Red Sox leadership will thread the needle and live just under the line some seasons. But a club with a long history of paying tax, a ballpark that prints money on summer nights, and a fan base that remembers recent titles is always one bold offseason away from overshooting the threshold again. That willingness to play with fire keeps them in this 7.
What Comes Next
The next flash point will not be a single contract. It will be the next collective bargaining agreement in 2027. Owners who sit well under the competitive balance threshold argue that current rules are too soft, especially while regional sports network money dries up and a few mega brands keep spending near or above 300 million.
On the other side, players and the union see the rising number of tax paying teams as proof that top talent still finds its price. They worry that any move toward a true hard cap would lock more money in owner pockets, not spread it to small market rosters. Mets, Dodgers, Yankees, and the rest of this list are the examples both sides point to when they argue about what is healthy for the sport.
Look, maybe I am biased toward big nights in packed parks, but there is something honest about an owner saying out loud that they are willing to pay the tax if it means a parade. The lingering question is simple. Do more clubs join these 7 over the next few seasons, or do the rules tighten until even the heavyweights think twice before writing another giant check to the league office.
