The 2025 MLB trade deadline is July 31, 2025 — just over a week away. The Texas Rangers are on the fringes of the playoff race, and could end up being buyers or sellers, depending on how the team performs in the run up to the deadline and the state of the trade market.
One of the factors that will potentially impact the Rangers’ decisions at the deadline — particularly if they are buyers — is the Competitive Balance Tax. After being a tax paying team in 2023 and 2024, the Rangers have, since the past
offseason started, indicated that they were going to be under the CBT threshold in 2025.
A quick primer on the CBT — teams that exceed the CBT threshold by $20 million or less pay a 20% tax on the overage if they did not exceed the CBT the previous year. If they are exceeding the CBT threshold for a second year in a row, the tax is 30%. If they are exceeding it for the third time or more, the tax is 50%.* There are additional surcharges and penalties beginning when you are more than $20 million over the CBT, though the Rangers have not exceeded that level previously.
* And yes, Ray Davis is a billionaire, he can afford to pay the overage tax, whether it is 20% or 50%. He is choosing not to this year. We are talking about the implications of that decision. This post is descriptive, not prescriptive.
The Competitive Balance Tax Threshold in 2025 is $241 million. If the Rangers stay under that, they reset their tax level, and will pay a 20% base rate if they exceed the CBT threshold of $244 million in 2026, plus whatever additional penalties and surcharges they may incur if they go more than $20 million over $244 million. You can read the details of all this here.
A team’s CBT payroll is calculated based the team’s average annual value of the contract of every player in the organization (or released) with a major league contract,* plus incentives paid, plus the team’s share of the pre-arbitration bonus pool, plus player benefits. The pre-arb bonus pool and player benefits are the same for each team — $1,666,667 million for the bonus pool and an estimated $17.5 million for player benefits, totaling roughly $19.2 million. That leaves a little over $221 million for player payroll before a team has to start paying the CBT tax.
* This isn’t as simple as factoring the AAV of a player’s entire contract, since, if a player is traded in the middle of a long-term contract, the acquiring team’s AAV for tax-paying purposes is what they will be paying on the contract. For example, Jon Gray is at $14 million in AAV for the Rangers, because his four year deal he signed with the Rangers averages out to $14 million per year. However, if he were to be traded, the acquiring team would get Gray at an AAV for tax purposes of $13 million, since that’s what his 2025 salary is, pro-rated for the portion of the season the acquiring team has Gray. If the Rangers were to pay some of Gray’s salary, that would reduce the acquiring team’s AAV according (and increase what the Rangers’ tax payroll amount is).
We can go to Cots and see that they have the Rangers at $232,949,536 for 2025. That includes the full amount due for everyone with guaranteed contracts, the split portions for players on the 40 man roster who have been optioned and have split contracts, the amount due the rest of the season for players in the majors (or the major league injured list) who are on split contracts (such as Cody Freeman, who will make $294,194 if he remains up the rest of the season, but whose number will go down if and when he is optioned), amounts paid for players no longer in the organization (Kevin Pillar, Leody Taveras and Dane Dunning representing the sizeable amounts), the money being paid for players in the organization by other teams (just Jose Ruiz, who Cots is assuming is having his salary covered by the Braves), and bonuses paid out (Jacob deGrom and Nathan Eovaldi and their $100K apiece for All Star bonuses).
That leaves, per Cots, $8,050,464 of room under the CBT for the Rangers. I would not assume that number is as accurate as the level of precision would suggest, given that there are certain assumptions built in (for example, are the Rangers really paying none of Jose Ruiz’s salary?), but I think its fair to say this is pretty close. So we will use $8 million for purposes of this analysis.
Does that mean that the Rangers can add $8 million in salary for the remainder of the season and not be a tax-paying team? Not necessarily.
Remember, award and incentive bonuses that are paid out count towards the CBT. And while we know that $200,000 in All Star bonuses have been paid out, we don’t know what additional bonuses the Rangers may end up paying.
For example — Jacob deGrom has an award bonus that will pay him $250,000 if he wins the Cy Young Award, with the amount of the bonus decreasing by $50,000 per level down to fifth place, which would earn him a $50,000 bonus. He also has a $150,000 bonus for winning the World Series MVP, and $100,000 for winning a Gold Glove or LCS MVP.
Now, the Cy Young Award has pretty much already been given to Tarik Skubal. However, deGrom is having a really good season. He could end up in the 3 to 5 range in the Cy Young voting, especially if he finishes strong. So, possibly, could Nathan Eovaldi, who has those same award bonus clauses in his contract.
So the Rangers are going to want to have some wiggle room there, as well as for the possibility of the team making the postseason and advancing to the LCS and maybe even the World Series and someone claiming those award bonuses.
What other bonuses do the Rangers have out there? Let’s run down them all...
Joc Pederson has award bonuses that would pay him $150,000 for being the league MVP, $100,000 for an All Star berth or a World Series MVP, and $50,000 for a Silver Slugger Award or LCS MVP. Nothing we need to concern ourselves with.
Tyler Mahle can earn an additional $5 million in performance bonuses based on innings pitched. Those bonuses are as follows:
$500,000 for 100 IP
$1M at 110 IP
$1M at 120 IP
$1M at 130 IP
$1.5M at 140 IP
Mahle currently has 77 innings pitched this year. Had Mahle stayed healthy, he almost certainly would have triggered all of those incentives for the full $5 million, and the Rangers would be bumping much closer to the CBT threshold (unless he was traded, in which case the bonuses triggered post-trade would be attributed to the acquiring team). Mahle will not be back until mid-August at the earliest, however. Exactly how much he will earn depends on when (or if) he returns and how well he pitches upon his return, but I would think that the $500K for the 100 IP threshold is very makeable, and there’s a pretty decent chance he hits the 110 IP and 120 IP marks as well.
Chris Martin has $150K bonuses at 45 IP and 50 IP, and a $200K bonus at 55 IP. Martin is currently at 34.1 IP, and appears to be looking at another stint on the injured list. If Martin is not out long, all those incentives are makeable, which would mean another $500K for Martin.
Hoby Milner has $100K bonuses at 35 and 45 IP, and $150K bonuses at 55 and 65 IP. Milner is already at 47 IP, so the Rangers are on the hook for an additional $200K already, and barring a trade or stint on the i.l., he will almost certainly earn the next two bonuses, which would earn him an extra $500K in all.
Luke Jackson has a potential $2.5 million in bonuses he can earn, based on games pitched and games finished. With 38 appearances, he has already earned $450K in bonuses. He can earn the additional amounts going forward:
$175K at 40 games
$225K at 45 games
$250K at 50 games
$300K at 55 games
$350K at 60 games
Jackson has finished 21 games. His incentives for games finished are as follows:
$50K at 25 games finished
$100K at 30 games finished
$150K at 35 games finished
$200K at 40 games finished
$250K at 45 games finished
At his current usage rate, barring a trade or stint on the i.l., Jackson should easily get another $600K in appearance bonuses, and could well collect the full $1.25M remaining in potential appearance bonuses. In regards to games finished, given he has lost the closer role, he would seem to be unlikely to finish more than 30 games, which would earn him $150K in additional bonuses.
Jacob Webb has a potential $1.5 million he can earn in performance bonuses, and while I have not seen the details, it appears to be based on appearances. Webb has made 40 appearances this year, and barring a trade or i.l. stint, I think it is safe to assume he’s going to earn close to, if not all of, the full $1.5 million.
Josh Sborz has performance bonuses for innings pitched:
$25K for 5 IP
$50K for 10 IP
$75K for 15 IP
$100K for 20 IP
That’s a maximum of $250K, with $75K, at least, seeming to be a given.
Patrick Corbin has incentive bonuses for innings pitched and relief appearances. He is at 99 IP, and so has already earned $500K in incentives, and the relief appearance incentives start at 35 appearances, which makes that moot. His remaining incentives for IP are:
$200K for 100 IP
$200K for 115 IP
$250K for 130 IP
$250K for 145 IP
$250K for 160 IP
$350K for 170 IP
If he stays in the rotation and pitches decently, he easily should earn another $900K in bonuses, and has a shot at another $250K or $600K on top of that. Which, with Jon Gray coming back, might help explain things if Corbin gets moved to the pen or is traded.
So factoring all that in, where are we?
If everyone stays healthy and no one is traded, we are probably looking at bonuses of:
Mahle — $0 to $2.5M
Martin — $0 to $500K
Milner — $500K
Jackson — $1.1M to $1.9M
Webb — $1.5M
Sborz — $0 to $250K
Corbin — $1.4M to $2M
So that $8M number that we were talking about earlier? There’s a lot less than that available. The Rangers already owe at least $1.15M in bonuses already earned, and probably more since Webb has probably earned some of his performance bonuses. So the $8M is more like $6.5-6.75M as of this moment, before any other bonuses are earned.
But the Rangers are realistically looking at a total of at least $5-6M in incentives they will owe, barring trades. And that means that the Rangers would be more like $2-3M under the CBT — or even less, if more of the incentives listed above are hit.
Jackson and Corbin are the guys with sizeable potential future bonuses that appear to be makeable, and so those two would seem to be players the Rangers would potentially look to move, particularly if they are in the market for bullpen help and if they think Jon Gray can step into Corbin’s spot in the rotation. Or they could try to offload Gray, which, if a team is willing to take his remaining salary, would save them about $5M on their CBT number, which would give them a lot more room to maneuver.
But if the Rangers are going to stay under the CBT threshold, and they are wanting to be buyers, they don’t have much a lot of leeway. So if the Rangers are buyers, don’t be surprised if they either also look to offload some salary, or else sweeten the package they are giving up to get the selling team to subsidize the new player’s salary to lessen the CBT burden on Texas.
