Juan Soto signed with the New York Mets earlier this month, agreeing to the largest contract in MLB history. Soto can make up to $765 million over the next 15 seasons. The deal includes a $75 million signing bonus and $305 million over the first five years. It’s an enormous contract, to be sure, but Soto is the type of player who can lead a team to the World Series—and the Mets are desperately craving that.
Of course, Soto won’t receive all of that money. A large chunk of it will go to taxes, and there are also agent fees to consider. So, when there are ways to salvage millions—even with a contract this large—it’s worth going down that route.
Thanks to how individual states tax their residents, Soto can save over $8 million this upcoming season.
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Soto currently lives in Florida, which has no state income tax. That means most of his $75 million bonus will be taxed at 37%, the highest federal tax bracket rate. The highest bracket begins when a person earns $578,125, so Soto will be taxed at lower levels until that dollar amount.
If he lived in New York, his money would be taxed at a rate of 10.9%, which is for people making at least $25 million during the year. Even non-math experts recognize Soto’s $75 million bonus is well over that amount. He’ll receive $47.25 million after federal taxes, but he also would have been docked another $8.17 million in state income taxes.
The rest of Soto’s contract will be taxed based on where he plays his games. Since the bulk of those games will be in New York, Soto can’t escape the state income tax rate for his salary. The Mets do play some games in states without income taxes, including games at their NL East foe, the Florida Marlins. Soto and his teammates won’t have to pay state income taxes for those contests.
Soto may ultimately find a new place to live in within New York. For now, being a resident in the Sunshine State is paying major dividends.
