# Calculating MLB payroll threshold for Luxury Tax

**URL:** <https://boards.straightdope.com/t/calculating-mlb-payroll-threshold-for-luxury-tax/777115>\
**Category:** The Game Room\
**Created:** [January 14, 2017, 4:29pm UTC](https://boards.straightdope.com/t/calculating-mlb-payroll-threshold-for-luxury-tax/777115 "2017-01-14T16:29:20Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![What\_Exit](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/what_exit/32/10652_2.png) [@What\_Exit](https://boards.straightdope.com/u/What_Exit)\
**Post date:** [January 14, 2017, 4:29pm UTC](https://boards.straightdope.com/t/calculating-mlb-payroll-threshold-for-luxury-tax/777115/1 "2017-01-14T16:29:20Z")

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My google-fu has failed me.  
It is the teams total salary averaging the cost of Contracts & Bonuses plus some number of benefits I cannot determine from googling.

It is the last part I am trying to determine.

Here is some of what I found:  
**2017 threshold: $195 million**  
**2018: $197 million**  
**2019: $206 million**  
**These are the penalties:**  
• First time over: 20 percent tax on the overage  
• Second time: 30 percent  
• Third time: 50 percent  
**There are also surtaxes:**  
• Between $20 million and $40 million over the threshold: 12 percent  
• $40 million over: 42.5 percent  
• Second time $40 million over: 45 percent

**Minimum salary** : The Major League minimum salary will increase from $507,500 in 2016 to: $535,000 in 2017; $545,000 in 2018; $555,000 in 2019; and be subject to a cost-of-living adjustment in 2020 and 2021.

\*\*Length of time on the DL: \*\*The minimum time on the league’s disabled list will go from 15 days to 10.

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**Author:** ![What\_Exit](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/what_exit/32/10652_2.png) [@What\_Exit](https://boards.straightdope.com/u/What_Exit)\
**Post date:** [January 15, 2017, 2:51pm UTC](https://boards.straightdope.com/t/calculating-mlb-payroll-threshold-for-luxury-tax/777115/2 "2017-01-15T14:51:41Z")

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Anyone know what the calculation is?

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**Author:** ![jonesj2205](https://avatars.discourse-cdn.com/v4/letter/j/ecc23a/32.png) [@jonesj2205](https://boards.straightdope.com/u/jonesj2205)\
**Post date:** [January 17, 2017, 12:06pm UTC](https://boards.straightdope.com/t/calculating-mlb-payroll-threshold-for-luxury-tax/777115/3 "2017-01-17T12:06:18Z")

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Sorry, I’m not clear. What is it you are looking for?  
If it is total team salary than you can just google [that](http://deadspin.com/2015-payrolls-and-salaries-for-every-mlb-team-1695040045).  
If it’s for how that’s determined than most of what you’ve described is irrelevant, it’s dependent on the contracts for the individual players.  
And I’m not sure how the DL stay fits into it at all.

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**Author:** ![What\_Exit](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/what_exit/32/10652_2.png) [@What\_Exit](https://boards.straightdope.com/u/What_Exit)\
**Post date:** [December 9, 2017, 1:50pm UTC](https://boards.straightdope.com/t/calculating-mlb-payroll-threshold-for-luxury-tax/777115/4 "2017-12-09T13:50:18Z")

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[From](http://www.philly.com/philly/blogs/phillies_zone/understanding-payroll-and-luxury-tax.html) Philly Inquirer: “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.”

In 2012: “A baseball source said the annual expense for medical benefits typically runs between $10 and $11 million per season. We’ll split it down the middle for our purposes and say $10.5 million.”

I’ve seen more recent estimates of $13 million average now.