Shohei Ohtani will make exactly $2 million in salary from the Los Angeles Dodgers this season. Kyle Tucker will make about $52.5 million in cash. Both are the Dodgers' two highest-paid players. One earns more in a single game check than the other earns all year.
This isn't an accounting error. It's not a mistake in the payroll system. It's the most powerful — and most controversial — financial tool in Major League Baseball: the deferred money contract. And it's reshaping the economics of the sport in ways that go far beyond the field.
⏰ Deferred Money in One Sentence: A player signs a contract today, but receives a large portion of the money years — or decades — after the contract ends. It's a time machine for your paycheck. And if you're smart about where you live when the checks arrive, it can also be a tax-evasion machine.
Every July 1, the New York Mets send a check for $1,193,248.20 to a 62-year-old man who last played for them in 1999. That man is Bobby Bonilla. He hasn't swung a bat in a Major League game in over two decades. And he will continue receiving that check every year until 2035.
The deal, negotiated by Bonilla and his agent Dennis Gilbert a quarter-century ago, has become the most famous deferred contract in sports history. But Bonilla was not the first to defer money — and he's certainly not the last. The Dodgers currently owe $1.08 billion in deferred payments to 10 different players, stretching from 2028 to 2047. Somewhere in the Guggenheim accounting department, there's a spreadsheet that looks like a mortgage amortization schedule for a small country.
🕰️ The Bonilla Forever Check: $1.19 million. Every July 1. Until 2035. Bobby Bonilla's deferred deal is now older than some of the players currently on the Mets' roster. It's not a contract anymore. It's a family heirloom.
Shohei Ohtani signed a 10-year, $700 million contract with the Dodgers in December 2023. On paper, that's $70 million per year. In reality, Ohtani deferred $68 million annually — meaning he takes home just $2 million in salary each season, and the remaining $68 million will be paid to him in equal installments from 2034 through 2043.
For the Dodgers, the benefit is immediate and massive. Because MLB calculates the Competitive Balance Tax (CBT) — the luxury tax — using the present-day value of contracts, Ohtani's $70 million annual salary counts as roughly $46 million toward the tax. That's $24 million per year in luxury tax savings. Over 10 years, that's $240 million the Dodgers don't have to pay in penalties.
For Ohtani, the benefit is even more staggering — but it arrives later. If Ohtani moves out of California after his playing career ends, he won't owe California's 13.3% state income tax on the deferred payments. At $68 million per year for 10 years, that's roughly $98 million in tax savings. Not a bad retirement plan for a guy who's currently making less than the Dodgers' backup catcher.
🧾 The Ohtani Tax Equation: Defer $680 million. Wait 10 years. Move to Florida or Japan. Avoid California's 13.3% state tax on the deferred payments. Save roughly $98 million. It's not tax evasion. It's tax geography. And it's completely legal.
Kyle Tucker's four-year, $240 million deal with the Dodgers took a different approach. Only $30 million of the contract is deferred. The real genius is in the structure: Tucker received a $64 million signing bonus, payable before he even reports for spring training. Because Tucker is a Florida resident — and signing bonuses are taxed in the player's state of residence, not the team's location — that $64 million avoided California's 13.3% state tax entirely. Estimated savings: roughly $9.2 million.
This is the new playbook for elite MLB free agents. Don't just defer money — front-load it into a signing bonus that gets taxed at your home address, not your employer's. The result: millions in tax savings, and a contract that pays you before you've even played a game.
💰 The Tucker Tax Play: $64 million signing bonus. Florida resident. Zero state income tax. Estimated savings vs. California taxation: $9.2 million. That's not a loophole. It's a masterclass in contract structuring.
The Dodgers' competitive balance tax payroll for 2026 is $413.6 million, according to Spotrac. That's $169.6 million above the $244 million luxury tax threshold. The team's estimated tax bill alone is roughly $161.9 million — which is higher than the entire payroll of 12 MLB teams.
Nine teams are paying luxury tax penalties in 2026, a new record. The total tax collected is $311.3 million, shattering the previous high of $209.8 million. The Dodgers, Mets, Yankees, and Phillies — all repeat offenders — are paying at the highest penalty rates: 50% on the first $20 million over the threshold, escalating to 110% on amounts above $297 million.
This spending disparity is widely expected to trigger a lockout when the current CBA expires after the 2026 season. Owners of small-market teams are pushing for a salary cap. The Dodgers, with $1.08 billion in deferred payments and a payroll that exceeds the GDP of several small nations, have become the poster child for why some owners believe the system is broken.
⚾ The Luxury Tax Ladder: $244M threshold → 20% tax (first year). $264M → 12% surcharge. $284M → 42.5% surcharge. $304M → 60% surcharge. The Dodgers are at $413.6M — beyond all four tiers. Their tax bill: $161.9 million. That's not a penalty. That's the cost of doing business when you're printing World Series rings.
The deferred money revolution changes the calculus for every MLB free agent. A $240 million contract isn't just about the total value — it's about when the money arrives, where you live when it does, and how much of it the tax man gets to keep.
For players signing with California teams, the math is particularly urgent. If you defer money and leave the state before the payments begin, you can legally avoid California's 13.3% top rate on that income. Over a decade of deferred payments, that's an eight-figure decision. And it's a decision that every elite free agent — and every agent negotiating on their behalf — now has to consider before touching a pen.
Our calculator doesn't handle deferred money directly — the tax math depends on too many variables (residency, timing, state tax laws at the time of payment). But it can show you what a standard MLB contract actually pays after federal tax, state tax, agent fees, and jock tax obligations. For players weighing a traditional contract against a deferred one, that baseline is the starting point for understanding what you're actually giving up — or gaining — by pushing money into the future.
Further reading: MLB's $357M Question: Skubal, Lockout & What Free Agents Keep · No State Tax Teams vs. High Tax States · Agent Commission Across Leagues · Free Agent Playbook: Compare After-Tax Earnings
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Use the Free Calculator →Disclaimer: This article is for informational purposes only. It does not constitute financial, tax, or legal advice. All data sourced from MLB.com, Sporting News, Fox Sports, Marca, Bleacher Report, USA Today, and Front Office Sports as of May 2026. Always consult a qualified professional.
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