Few of the game’s core economic features figures to be as impactful in upcoming collective bargaining negotiations as the luxury tax (or competitive balance tax, as it’s officially known). Where to set the tax thresholds and what penalties should be in place for teams that exceed them are key points of issue for the league’s owners and the MLB Players Association.

As a brief primer, the luxury tax was first introduced for the 1997 season. The provision’s purpose is to deter spending among big-market franchises by penalizing teams that exceed certain player expenditures. (MLBTR’s Tim Dierkes covered the year-by-year progression of the luxury tax in a post earlier this month). Teams that surpass certain thresholds will be faced with financial penalties and potential draft choice/international signing bonus forfeitures, which become more significant for teams that exceed the threshold by particularly high margins and/or surpass the mark in multiple consecutive seasons. Teams’ CBT figures are calculated by summing the average annual values of their commitments and accounting for certain player benefits, not by looking at clubs’ actual payrolls in any given year.

For the 2021 season, the first luxury tax marker was set at $210MM. Only the Dodgers and Padres exceeded that figure. Five teams, meanwhile, curtailed their spending between $205MM and $210MM, seemingly treating the CBT threshold as some form of cap.

The three clubs that exceeded the threshold in 2020 (the Yankees, Astros and Cubs) all ducked underneath in 2021. That’s in continuation with a fairly common pattern for teams to “reset” their tax bracket after a year or two above the threshold, thereby avoiding the escalating penalties for exceeding in consecutive years.