Yankees set to avoid luxury tax; Red Sox, Nationals only teams over threshold

NEW YORK -- The New York Yankees are set to achieve their goal of coming under baseball's luxury tax threshold for the first time since the penalty started taking effect in 2003.

The Boston Red Sox and Washington Nationals remain the only teams on track to pay the tax this year, according to Aug. 31 figures compiled by the commissioner's office for clubs and obtained by The Associated Press.

The Yankees' updated luxury tax payroll is $192.1 million, an increase from $178.8 million at the season's start. New York is set to finish below this year's $197 million threshold even with possible performance bonuses of $500,000 for pitcher CC Sabathia pitching 155 innings and $125,000 for infielder Neil Walker reaching 425 plate appearances, plus the addition of nearly $3,000 a day for each September call-up on expanded 40-man active rosters.

New York has paid the tax 15 straight years, for a total of $341 million.

Boston's luxury tax payroll was at $238.4 million on Aug. 31, up from $233.9 million on Opening Day. That boosted the projected tax for the AL East-leading Red Sox to $11.3 million from $9.4 million. Boston, which has the best record in the majors, added pitcher Nathan Eovaldi and second baseman Ian Kinsler ahead of the July 31 trade deadline.

Washington's luxury tax payroll was second at $203.9 million, an increase from $201.1 million, which raised the projected tax of the nearly eliminated from playoff contention Nationals to $2.1 million from $1.2 million.

Both figures might go up because of earned bonuses and call-ups.

San Francisco has cut luxury tax payroll slightly to $195.3 million from $196.7 million on Opening Day.

The Los Angeles Dodgers are next at $194.5 million, up from $182 million on Opening Day. The Dodgers have had the highest tax bill for the past four seasons and have paid nearly $150 million over the last five years.

New York and Los Angeles are set to reset their base tax rates from 50 percent to 20 percent of the amount over next year's threshold of $206 million. That would put them in better position heading into a free-agent class that includes Bryce Harper, Manny Machado, Josh Donaldson and potentially Clayton Kershaw, who has the right to opt out of his deal with the Dodgers.

Boston's base tax rate was 30 percent in 2016 but reset to 20 percent because the Red Sox dropped under the threshold last year. Under the surtax in the collective bargaining agreement that began last year, the rate for the Red Sox rises to 32 percent on the amount above $217 million this year and to 62.5 percent on the amount above $237 million.

Because Washington paid the tax last year, the Nationals' base rate is 30 percent.

Base rates will increase next year to 30 percent for Boston and 50 percent for Washington.

Luxury tax payrolls are based on the average annual values of contracts of all players on 40-man rosters and include $14,044,600 per team in benefits.