Mookie Betts' Financial Strategy: How Taxes Affect His $365 Million Contract

Mookie Betts has been a prominent figure in Major League Baseball, making headlines not just for his outstanding performance on the field but also for his impressive financial decisions. After joining the Los Angeles Dodgers via trade earlier this year, many speculated that he might only spend one season with the team. However, Betts put those rumors to rest when he signed a 12-year, $365 million extension in July, securing his position with the Dodgers through 2032. This remarkable deal not only solidifies his future but also raises questions about how taxes will impact his earnings.

With a $65 million signing bonus included in his contract, Betts faces a significant tax burden. Depending on where he maintains his primary residence, he could lose over half of that bonus to taxes. According to Sportico, Betts will pay 37% of his salary in federal taxes due to his average salary exceeding $30.4 million, placing him well within the highest tax bracket. Additionally, as a resident of California, he will owe 13.3% in state taxes, which is the highest state tax rate in the United States. This situation is not uncommon for athletes who earn substantial salaries.

Regardless of the state, it’s evident that Betts will lose more than 50% of his salary to taxes. However, he could save a significant amount if he continues to live in Tennessee, where there are no state income taxes. By making Tennessee his permanent residence, Betts could avoid the hefty state tax on his signing bonus and potentially save millions in the long run. He currently claims Tennessee as his main residence, and the implications of this decision could have a lasting impact on his financial landscape.

Personal Details	Data
Name	Mookie Betts
Team	Los Angeles Dodgers
Contract Value	$365 million
Signing Bonus	$65 million
Federal Tax Rate	37%
California State Tax Rate	13.3%
Main Residence	Tennessee
Deferred Earnings	$115 million