Money doesn't buy happiness, but in baseball, it definitely buys a lot of luxury tax bills. If you've been following the hot stove this winter, you know the numbers are getting stupid. We are talking about $700 million deferrals and 15-year contracts that won't end until the 2040s. Right now, the biggest payroll in MLB belongs to the Los Angeles Dodgers, and it isn't even particularly close.
They are sitting at an estimated $357 million for 2026 when you factor in the "tax tracker" metrics. That is a massive number. But honestly, the raw total doesn't tell the whole story because of how teams like the Mets and Dodgers manipulate the math.
The Dodgers and the Art of the Deferral
The Los Angeles Dodgers are basically running a high-end hedge fund that happens to play baseball. They finished 2025 with a record-shattering $417 million Competitive Balance Tax (CBT) payroll. They paid over $169 million just in taxes. Think about that. Their tax bill alone was higher than the entire roster cost of 20 other teams.
Most fans look at Shohei Ohtani's $700 million deal and think the Dodgers are spending $70 million a year on him. They aren't. Because he deferred $680 million of that, his actual take-home pay for 2026 is a measly $2 million. However, for "biggest payroll in MLB" purposes, the league uses an Average Annual Value (AAV) calculation. This brings his tax hit to about $46 million.
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It's a loophole, sure. But it's a legal one. By pushing the actual cash payments into the 2030s, the Dodgers can afford to stack guys like Tyler Glasnow ($32.5M in 2026) and Blake Snell ($27.8M) on the same roster without the whole thing collapsing under its own weight.
Why the New York Mets are Still Chasing the Top Spot
Steve Cohen isn't exactly hurting for cash. The Mets are currently trailing the Dodgers with a projected 2026 payroll around $317 million. A huge chunk of that comes from Juan Soto. The Mets grabbed him with a 15-year, $765 million deal that pays him roughly $61.8 million in total cash for the 2026 season.
Soto is officially the highest-paid player in the sport for 2026 in terms of actual money entering a bank account.
The Top 5 Biggest Payrolls in MLB (Projected 2026)
- Los Angeles Dodgers: $357.2 Million
- Philadelphia Phillies: $336.8 Million
- New York Mets: $317.0 Million
- Toronto Blue Jays: $312.3 Million
- New York Yankees: $292.3 Million
Notice the Phillies jumping up there? They are quietly spending a fortune. Zack Wheeler is making $42 million this year. Bryce Harper and Trea Turner are both north of $27 million. They are all-in, and the tax man is going to come calling for them just as hard as he does for the big New York teams.
The Luxury Tax Trap
Most people hear "luxury tax" and think it's a flat fee. It’s way more punishing than that. If you go over the threshold ($244 million for 2026) for three or more years in a row, you're paying 50% on the overage.
The Dodgers, Mets, Yankees, and Phillies are all in that "repeat offender" bracket. When the Mets spend $1 on a player, they’re actually paying almost $2 because of the penalties. That is why Steve Cohen gets so annoyed when people say he’s "cutting payroll." He’s not cutting; he’s just trying to survive a system designed to stop him from buying every All-Star on the market.
Small Markets and the Great Divide
On the flip side, you have the Miami Marlins and Oakland (now Athletics) sitting at the bottom. The Marlins are projected to spend about $100 million total. The Nationals are even lower at $21 million in active roster commitments as they rebuild.
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The gap between the biggest payroll in MLB and the smallest is now over $300 million. That is essentially three entire mid-tier rosters of difference.
- Toronto’s Surge: The Blue Jays are the surprise entry in the top four. With Vladimir Guerrero Jr. making $40.2 million and Dylan Cease at $35 million, Canada’s team is officially a big spender.
- The Yankees' Dilemma: They lost the Soto sweepstakes to their cross-town rivals, which actually dropped their payroll slightly. But with Aaron Judge ($40M) and Gerrit Cole ($36M), they are still heavy hitters.
- The Braves' Efficiency: Atlanta stays competitive while keeping their payroll around $266 million. They lock players into long-term deals early, avoiding the massive $40M+ annual hits that plague the Mets.
Actionable Insights for Fans and Analysts
If you are trying to project who will win the 2026 World Series based on spending, keep these nuances in mind.
First, watch the "CBT Payroll" vs. "Active Cash." A team might look like they are spending less cash (like the Dodgers with Ohtani), but their tax hit remains high, which limits their trade deadline flexibility.
Second, pay attention to the "Reset." Teams like the Yankees often try to dip under the tax threshold for one year to reset their penalty clock from 50% back down to 20%. If a big-market team isn't signing anyone this July, it's usually because their accountants told them the tax bill is too high.
Finally, remember that the "biggest payroll" rarely guarantees a ring. The 2025 Dodgers won it all, but the 2025 Mets missed the playoffs entirely despite spending nearly $350 million. Payroll gives you a higher floor, but in October, a $700,000 rookie can still strike out a $40 million superstar.
To stay ahead of the curve, check the official tax tracker updates in July. Teams often add $20-30 million in "pro-rated" salary at the trade deadline, which can completely flip the rankings by the time the postseason starts.