With the threshold set at $197 million for 2018, the Red Sox have a projected total payroll of $238.4 million after acquiring Nathan Eovaldi and Ian Kinsler midseason. Boston would thus pay an additional $11.3 million in tax for the overage.
While the Red Sox blew past the threshold, the Nationals will finish much closer. At $203.9 million, Washington is set to owe an additional $2.1 million in tax.
The New York Yankees, meanwhile, will finish under the threshold for the first time since the penalty was introduced in 2003.
MLB's competitive balance tax acts as a soft salary cap, and penalties have increased in severity in recent years. Under the new collective bargaining agreement ratified prior to the 2017 season, prohibitive penalties for exceeding the threshold at additional higher tiers were introduced. Further penalties are imposed for consecutive seasons spent above the competitive balance tax line.
Under the current model of wealth redistribution, the first $13 million collected via tax, with accrued interest, will go toward the Major League Baseball Players Benefit Plan Agreements with the remaining proceeds split between players' retirement accounts and the teams that did not exceed the luxury tax.