Merrill Kelly Cites California Tax Rates in Decision to Rejoin Arizona Diamondbacks
PHOENIX, Ariz. — Merrill Kelly, the Major League Baseball pitcher who has spent the majority of his career with the Arizona Diamondbacks, has revealed that California’s high income tax rates played a significant role in his decision to reject a lucrative offer from the San Diego Padres this offseason. Kelly, who pitched for the Texas Rangers in 2025 before entering free agency, ultimately agreed to a two-year, $40 million contract to return to Arizona, a state known for its more favorable tax environment.
Kelly’s candid remarks shed light on the financial considerations that professional athletes weigh beyond the headline figures of their contracts. The Padres had reportedly offered Kelly a three-year deal comparable in total value, but California’s top marginal income tax rate of 13.3% on earnings above $1 million proved a decisive factor. “I don’t think it’s any secret how much money you get taken out of your pocket when you go to California,” Kelly said in an interview, emphasizing the impact of state tax policies on his net earnings.
California’s tax structure has long been a point of discussion among athletes and high earners. According to the California Franchise Tax Board, the state imposes one of the highest top marginal income tax rates in the nation, which can significantly reduce take-home pay for individuals with multimillion-dollar contracts. In contrast, Arizona’s top income tax rate is substantially lower, making it a more attractive destination for athletes seeking to maximize their earnings.
Kelly’s decision reflects a broader trend in professional sports where tax considerations influence team choices, contract negotiations, and even retirement decisions. The financial calculus extends beyond salary figures to include state and local taxes, cost of living, and other economic factors. The Major League Baseball Players Association has noted that players often consult financial advisors to navigate these complexities during free agency.
Returning to the Diamondbacks marks a homecoming for Kelly, who spent the first seven years of his MLB career in Arizona before brief stints elsewhere. His familiarity with the team and community, combined with the favorable tax environment, contributed to his choice. The deal also signals the Diamondbacks’ commitment to retaining key talent amid competitive bidding from other franchises.
While the Padres’ offer included an additional year, the higher tax burden in California diminished the financial appeal for Kelly. This scenario underscores how state tax policies can affect not only individual decisions but also team strategies in assembling rosters. The Tax Policy Center has highlighted how tax differentials between states can influence labor mobility and economic decisions for high-income professionals.
Kelly’s experience may prompt other players and agents to scrutinize tax implications more closely in upcoming free agency periods. As teams in states with high tax rates compete for talent, they may need to offer higher gross salaries or other incentives to offset the tax disadvantages.
For now, Kelly’s return to Arizona is set to bolster the Diamondbacks’ pitching rotation as the 2026 MLB season approaches, while also serving as a reminder of the often-overlooked financial factors shaping professional sports careers.
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