Shohei Ohtani’s Contract: A Tax Break in Baseball’s Biggest Deal

LOS ANGELES, CA — In December 2023, Shohei Ohtani signed a historic 10-year, $700 million contract with the Los Angeles Dodgers. This deal stands out not only for its size but for the significant tax advantages it offers Ohtani, potentially allowing him to avoid paying $90 million in California state income tax.

Ohtani’s contract stipulates he will receive $2 million annually for a decade, totaling $20 million in direct payments. The remaining $680 million will be distributed after the contract officially ends. This deferral is strategic, as California levies a top income tax rate of 13.3%, one of the highest in the nation.

Since entering Major League Baseball (MLB) in 2018, Ohtani has emerged as an unstoppable force. Initially with the Los Angeles Angels, he won the 2018 Rookie of the Year award and has been selected to the All-Star game five times. He has also claimed three Most Valuable Player (MVP) awards and made history as the first player to join the ’50-50 club’ with over 50 home runs and 50 stolen bases in a single season.

Ohtani’s exemplary performance continued in the 2025 World Series, particularly during Game 3, where he hit two home runs and two doubles. His presence on the field has become so impactful that he was walked five times by the Toronto Blue Jays, who preferred to let him reach base rather than face the risk of a powerful hit.

Not only has Ohtani shone on the diamond, but he has also become a prominent figure in popular culture, influencing the global branding of MLB players. His dual capabilities as a pitcher and hitter create a unique appeal and elevate the league’s stature across different markets.

As Ohtani’s contract exemplifies a new financial strategy, many wonder if more athletes will adopt similar deferral tactics, particularly in high-tax states. The California Legislature has been attentive to this issue, with discussions led by Josh Becker aiming to address these tax strategies, yet no legislative changes have emerged.

With Ohtani’s prowess and strategic financial planning, his career trajectory could reshape how athletes manage their earnings in the future, posing significant implications for high-income earners in various fields.