League rules · MLB
MLB contract rules: what comes off the salary before tax
MLB caps agent commission at 5%. On a $10M contract that is $500,000, leaving $9,500,000 to be taxed. 30 clubs are modelled on this site.
The rules in force for 2026-27
MLB has no salary cap. Agent commission is capped at 5% by the MLBPA, and the collective bargaining agreement expires on 1 December 2026.
What the deductions cost at each contract size
| Contract | Agent fee (5%) | Escrow | Left to tax | Total held back |
|---|---|---|---|---|
| $1,000,000 | $50,000 | — | $950,000 | 5% |
| $5,000,000 | $250,000 | — | $4,750,000 | 5% |
| $10,000,000 | $500,000 | — | $9,500,000 | 5% |
| $25,000,000 | $1,250,000 | — | $23,750,000 | 5% |
These are the league-level deductions only. Income tax, social contributions and jock tax come off what remains — the MLB league page shows the after-tax result for every club.
Why the agent cap matters more than it looks
Agent commission is charged on gross salary, before tax, and it is not deductible. At 5% MLB sits at the top of the range we track, so a $25M contract pays $1,250,000 in commission alone.
Compare against the other 14 leagues
Agent commission ranges from 3% in the NFL to 7% in the IPL. See every league side by side →
Where the club plays decides the tax bill: MLB take-home rankings for all 30 clubs →