Red Sox fans may finally be heartened their team has secured homegrown star Rafael Devers with a contract extension reported to be worth $331 million, including a $20 million signing bonus. But the team’s dithering will cost their star third baseman hundreds of thousands of dollars due to a new state income tax.
Massachusetts voters narrowly approved an amendment to the state constitution in November that adds a new tax tier to the Bay State’s flat 5% income tax rate. That rate: an additional 4% cut of income over $1 million. The “millionaires tax” will cost Devers an additional $760,000 taken from his signing bonus—more than an MLB rookie makes. The kicker: Had the Red Sox and Devers inked the deal just four days earlier, ahead of the new year, he would have avoided the levy. Including the existing base tax rate, Devers will pay around $1.76 million in state taxes on the bonus.
The new tax will also apply to Devers’ base salary, which will be slightly more than $30 million when the extension starts in 2024, according to reports. Since Devers and the Red Sox play half their regular season games outside of Massachusetts, his ultimate tax bill will vary, as players get taxed in the various jurisdictions they play in. So Devers and company face a higher rate when the Sox visit the archrival Yankees in New York, where both city and state income taxes likely mean a 9% or higher rate, and nothing during visits to the pesky Rays in Florida, where there is no income tax.
There’s little doubt Red Sox fans care less about taxes than the team finally getting a high profile deal done. Earlier this offseason Boston lost star shortstop Xander Bogaerts in free agency, less than two years after trading one of the game’s biggest stars, Mookie Betts, ahead of his free agency.