I am writing this in April of 2025. So I have no f’ing idea how it will age. But April means two things: baseball and taxes. At the moment, we still have to pay income taxes. Until the tariffs fill our pockets with gold and riches like we’ve never seen before…
Two things prompted this. One is that as contracts have gotten larger and larger, so have people’s thoughts about them. People make excuses for why a player went one place and not another, and the most common excuse is state income tax rates in different states. I don’t think it’s as big a deal as people think. People still sign with the Dodgers every day it seems like. You have two people in your corner if you’re trying to keep as much of that salary as possible… your lawyer and your accountant. Contracts are now routinely written in creative ways to skirt state, local and federal tax laws in technically legal, morally questionable methods. Maybe by having a secret, illegal offshore account:
But what riches do baseball players actually come home with after their splashy mega deals? This Andrew McCutchen paystub from 2015 gives a little clue, but let’s dive into it further.
Let’s look at a hypothetical situation where you can sign a $10,000,000 contract for the 2025 season with the A’s, the Rangers or the Pirates, and what that would mean for your bank account. This is just a straightforward one-year deal (oh and you’re single, relationships just complicate things...) No deferrals, no signing bonuses, no incentives, no 1% donations to the Braves Foundation. Like I said, these things can get confusing even for the MBAs and CPAs and esquires of the world, let alone someone like me, who despite holding an accounting degree, am still outclassed by TurboTax.
Players are paid during the regular season on a bi-weekly rate. There are 26 weeks between Opening Day and Game 162. That’s 13 checks of $769,230.77 in gross wages. These three teams (yes even John Fisher’s and Bob Nutting’s teams) offer a 401k that we will take advantage of. The maximum we can contribute is $23,500 for the year, or $1,807.69 in pre-tax deductions per check. We also get to deduct health insurance and group-term life insurance premiums from our taxable income, but baseball teams cover our health costs. We players are basically racehorses in a stable to them.
Federal Taxes
First up, the federal government gets a cut. The MLB minimum salary is $760,000, so even rookies are in the top tax bracket. At $10million, we’re going to owe quite a bit at the 37% level. That tier affects every dollar earned above $626,350. For our bi-weekly paychecks, we need to withhold 37% of our salary. That amounts to $283,946.54 in federal withholding. The next two parts of federal taxes are the two components of FICA: social security and Medicare. Social security is capped to the first $176,100 of wages, which means we’d reach that cap somewhere around the 1st inning of the second game of the season. It’s 6.2% of that, or $10,918 for the year. Our first check will show that, the other 12 will not. But Medicare is not capped, and we owe 1.45% of our salary to that. That’s $11,127.63 per check.
Our federal government commitments for our $10million salary work out to about $3,691,305 in federal taxes, $10,918.20 to social security and $144,659.25 for Medicare.
After the 401k pre-tax deduction and federal taxes, our net pay is now $6,129,617.55 for the season, or $471,509.04 per check.
State Taxes
Now let’s work at the state level. Fortunately, I only have to do this for California and Pennsylvania. For simplicity, you are also a resident of the state each team plays in. Again, there’s ways to get around it, such as being a resident of a non-income tax state like Florida and thus only paying taxes on days you “worked” for your team, even home games.
Texas has no state income tax and therefore no taxes are withheld.
California: California has a progressive tax bracket, ranging from 1% to the top tax rate of 12.3% on every dollar over $721,314. There is also a Mental Health Services surcharge of 1% on all income in excess of $1million. Our final tax bill would come out to $1,298,269.00 to The Golden State, or $92,961.85 per check.
Pennsylvania: Pennsylvania goes with a flat 3% tax rate for everyone, whether you’re the Pirates left fielder or lemonade stand cashier in the left field concourse. That would be a total tax bill to the Keystone State of $299,295, or $23,022.69 per check.
State Taxes (for visitors)
Now for the fun part! Many cities and states have what are referred to as Jock Taxes. This is where you pay income tax on the games you played on their turf. It’s mostly a way to tax wealthy people when it’s easy to prove they earned income in that specific location. Athletes, touring musicians, actors… those people are high visibility, so the tax man can easily show they were in-state for a set amount of time. Unlike other high-income earners who can work the schedule to have their income “earned” in different locations via remote work or “creative” accounting, it’s easy to turn on a TV broadcast and see that Juan Soto is indeed earning a massive paycheck in the state of Colorado today.
If you’re an MLB player, your salary will be broken out over the regular season, which states call “duty days”. In 2025 the season runs from March 27th to September 28th. That’s 186 days. If you play a 3-game set at Target Field in August, you’ve earned 3/186, or 1.6%, of your salary beating up on the Twins. You still pay taxes to your state of residence on 100% of your income. So this is in addition, and unless you’re on the IL or suspended because you took PEDs to justify getting a $10million contract without ever playing pro ball, you’ll be paying up.
There are 81 away games during the season, but not every game will be subjected to this. And for simplicity, you’re not making the All-Star Game in Atlanta this season. Not even as an alternate.
Now who’s taking some extra fees?
Let’s start with who won’t be: Washington D.C., Washington state, Florida and Texas all have either no income tax or do not collect on visiting athletes.
There are also some instances where states do not collect on each other’s athletes (and other interstate employees) with reciprocal agreements. This is something that came up in the Supreme Court recently concerning the Commerce Clause in the Constitution (some of us still believe in that document). There are some confusing forms that have to be filed for these to work, but I assume for the thousands of dollars it can save, it’s worth it. Not every state has an agreement with other states, and I’ll note the ones I find. California and Arizona have an agreement, but the A’s don’t play there in 2025. There are no agreements with Texas (hard to reciprocate with no income tax), so the Pirates will be the only one subject to some of these breaks.
Arizona: The Pirates and Rangers each play a 3-game set at Chase Field. Three games amounts to $160,911.29 of salary taxed at an effective rate of 2.27% (top bracket is 4.5% for Diamondbacks players). You’ll be cutting a check for $3,658, and as a resident, I thank you for funding our never-ending road construction.
California: The Pirates play 9 games in California, so that’s $482,733.87 of salary. And the Rangers play 19 games, so even though you’re loving that tax-free life in Texas, you’ve got $1,019,104.84 subject to California’s income tax. The Pirates bill comes out to $42,514 and the Rangers 19 games in California will cost you $106,045.
Colorado: The Pirates and A’s each play three at Coors Field. It’s a flat 4.4% income tax, or $7,080.10 out of your pocket while you take in the mountain air.
Georgia: A three-game set against the Braves will be taxed at 5.49% and cost $8,834.03. Only the Pirates visit Georgia this season.
Illinois: All games in Illinois are taxed at 4.95%. And with an AL and NL team in Chicago, no one escapes this. It’s just a matter of how much. The A’s play three games, working out to $7,241.01 in taxes. The Rangers play 6 games and owe $14,482.02, while the Pirates play their division rival Cubs 7 times and chip in $16,895.69.
Massachusetts: Each team plays three games in Fenway Park, so we won’t make enough to reach the million-dollar bracket 4% extra income tax surcharge. We do owe 5% of our salary, however, which is $8,045.56. I can’t believe they make us play in Taxachusetts!
Maryland: Each team plays three games in Camden Yards. We don’t make enough to get into the highest bracket; our $160,911 subjects us to a top tax of 5.5%, but an effective rate of 4.82% and $7,750 in taxes. Good news Pirates! Maryland has a reciprocal agreement with Pennsylvania and you’re off the hook. Sorry if you’re on the Rangers or A’s.
Michigan: Each team plays three games in Comerica Park, and that is a flat tax rate of 4.25%. We give Michigan $6,838.73.
Minnesota: Each team plays three games in Target Field. The good news is we don’t owe any state income tax for the games, but they do collect a 2% tax on “nonresident entertainers” for all income earned against the Twins. That’s our lightest bill so far: $3,218.23.
Missouri: A lot of games to play in Missouri for each team, and that leads to us being taxed upwards of 4.8%. We shall come back to Missouri in a bit. The effective tax rate works out between 4 and 5% based on games played:
A’s (6 games): $14,327
Pirates (10 games): $24,625
Rangers (4 games): $9,178
New York: The next highest taxed state after California, we won’t reach the super high rates that residents making over $1million pay, but the Rangers 7 games in the Big Apple will make a dent of $23,320.09. The A’s and Pirates each play a 3-game set and lose $9,086.68 to the Empire State.
Ohio: The Pirates and Rangers each play 6 games in Ohio this year, but the Pirates get to save taxes on the $321,822.58 they earn with a reciprocal agreement. The Rangers contract would owe $10,158.11 for your 6 games while the Athletics comes in at $4,526.22 for 3 games in Cleveland.
Pennsylvania: Like Minnesota, Pennsylvania enforces a 3% nonresident entertainer tax. Obviously, that won’t affect the Pirates (though if you claim residence in another state while playing for the team, you would be subject to this for all 81 home games). Each of the A’s and Rangers 3-game visits to Pennsylvania this season will cost you $4,827.34. Currently, the PA Supreme Court is hearing a case on the legality of said tax, but for now, better pay it.
Wisconsin: The threshold for the top bracket of 7.65% in Wisconsin is over $400k, so we won’t be getting dinged at that rate, instead closer to 5%. The A’s 3 games work out to $8012.78 while both Pirates visits work out to $16,541.08 for 6 games at Miller Park. The Rangers avoid the Brew Crew this season.
Canada
Ah, Canada. Yes, we still pay taxes while in Canada. Who knows if we will tomorrow. But for now, there is a tax treaty between the two nations that allows taxes to be collected for work performed on either side of the border regardless of home country. The good news is we can deduct foreign taxes from our federal tax return. The A’s play a 4-game set, so you’d make $214,548.39 north of the border, and the Rangers play 3 games.
It gets a little complicated. Canada’s federal tax rate tops out for these amounts at 26% and 29% (3 vs 4 games). The province of Ontario will have us in the 12.16% bracket. So the A’s 4-game set means that last game will have you paying 41.16% of those last dollars you earn. The good news, though, is that these amounts are 100% deductible on your US return. It still doesn’t make you whole, however, since there’s a 4% gap between the Canadian top rate and the 37% US federal rate.
So for 3 games, the A’s will pay $46,507.92 while the Rangers get dinged for $68,216.09. I was going to make a couple Canadian jokes in this section, but being an American right now already is the most embarrassing punch line, so I’ll hold back.
Cities and Counties
Some states allow their cities and counties to levy income tax. Usually, these entities get their revenue from property tax, sales tax, excise tax and in San Luis Obispo’s case, issuing my sister parking tickets. But some others choose to get some of that sweet athlete contract salary tax revenue. Luckily, it’s not too many, and the legality of these are being challenged in states around the country (Ohio struck down the ones in Cleveland and Cincinnati as unconstitutional recently.)
Baltimore: In Maryland, all counties collect income tax. But Baltimore City is technically not in Baltimore County, it’s its own jurisdiction. Did we save ourselves from taxes??? No. Well, except the Pirates (reciprocal agreement). Baltimore city income tax is 3.2%, meaning our trip to Maryland got $4,827.34 more expensive for the A’s and Rangers series, plus that $7,750 already taken by the state.
Kansas City and St. Louis: There are only two cities in Missouri that collect income taxes. They just happen both have MLB teams. Imagine that. Both cities collect 1%. That’s $5,363.71 on the half-mil you’ll make as a Pirate in Missouri for 10 games (3 in KC, 7 in STL); $3,218.23 for 6 games as an Athletic (3 in KC, 3 in STL), and $2,145.48 for the Rangers 4-game set in Kansas City.
New York City: New York City collects 3.08% in income tax. Given all the entertainers and athletes that roll through there, they’ve gotta be paving the streets with gold! Six games as a Ranger will cost $9,912.14, and 3 each as a Pirate and Athletic will cost $4,956.07.
San Francisco: The last of this long list is the city of San Francisco. They also collect the smallest tax on this list, at 0.38% of income. The A’s and Pirates both play 3 games at the most beautiful ballpark in the big leagues, and for that privilege they each pay $611.46 in city tax. The Rangers do not venture into The City in 2025.
Total
So that $10,000,000 contract we signed before spring training? How much are we going home with in October after we get released because we had a .000 batting average and 72 errors? A couple notes first.
There are other paycheck deductions like Major League Baseball dues that I did not account for. There’s also things that get considered income, like complimentary tickets and meal money, but these are relatively minor dollar amounts that don’t move the needle too much one way or the other when we’re talking tens of millions of income. We also saved money because we didn’t use an agent, so that’s nice. We’re still multi-millionaires!
Sacramento A’s: $4,690,273.90
Salary: $10,000,000
Pre-tax 401k deduction: $23,500
Federal Taxes (including FICA): $3,846,882.45
CA Resident Taxes: $1,298,269.00
Out of State “Jock” Taxes: $94,566.73
Canada: $46,507.92
Average bi-weekly paycheck: $360,790.30
Pittsburgh Pirates: $5,705,136.38
Salary: $10,000,000
Pre-tax 401k deduction: $23,500
Federal Taxes (including FICA): $3,846,882.45
PA Resident Taxes: $299,295.00
Out of State “Jock” Taxes: $125,186.17
Average bi-weekly paycheck: $438,856.64
Texas Rangers: $5,846,995.43
Salary: $10,000,000
Pre-tax 401k deduction: $23,500
Federal Taxes (including FICA): $3,846,882.45
TX Resident Taxes: $0.00 (but you live in the same state as Ted Cruz)
Out of State “Jock” Taxes: $214,406.03
Canada: $46,507.92
Average bi-weekly paycheck: $449,768.88
As you would’ve guessed, you save almost $1.2million (25%) by playing in Texas versus California. I was surprised the Texas contract is only 2% more take home dollars than the Pennsylvania one, but I think with the Rangers having to play so many games in California, New York and Toronto every season, they get the highest jock taxes placed on their salaries.
Is California over-taxed? Sure. Is New York? Definitely. You can tell why players are finding creative ways to skirt the various income taxes. Vladimir Guerrero Jr’s recent $500million signing came with a $325million signing bonus. Signing bonuses aren’t considered income earned where you play, but where you live. And since he lives in Florida, he saves millions. Same thing with Shohei Ohtani. His $2million salary for the duration of the 10 years with the Dodgers costs him far less in taxes than $70million would. And when he’s retired and collecting the balance of the deferred payments, he can do it somewhere with a friendlier tax environment.
Is it right? Probably not. I mean, you’re using all the infrastructure and social services that those taxes provide, including the roads and public transportation and public stadium maintenance that helps bring fans in to fund the salary... I know taxes get looked at negatively, but it is the cost of society. And while you might gasp at fraud and waste in various welfare programs, those amounts are minimal when compared to these tax loopholes that cost governments millions in revenue that then has to be made up somewhere else (either with budget cuts that somehow always affects schools and first responders, but never stadium renovation funds; or with increased taxes that disproportionately impact lower income individuals, like sales tax and vice taxes).
So now when you think about players signing large contracts with one team or another, and your instinct is to scream “TAXES” as an excuse, you can see that it’s still pretty negligible at these income levels. But they are unfathomably large numbers for the general public. Even the $10,000 bill a Texas Ranger would pay the state of Ohio for less than a week of work is more than many pay in a whole year.
Disclaimer: this is mostly a rough estimate. There’s a reason becoming a CPA requires a bachelor’s degree, 150 hours of post-grad education, a year of apprenticeship for a licensed CPA and passing a difficult four-art exam. It’s because accounting is hard! And the longer you do it, the more you want to drive your car into the Grand Canyon instead of pulling yet more audit backup.
Anyways… I’ll leave you with my favorite tax clip in TV history: