SF Giants reset luxury tax penalties, dip under CBT threshold in 2025

While the SF Giants missed the playoffs this year, they did achieve one goal. They came in below the $241 million Competitive Balance Tax (CBT) threshold for 2025, thereby resetting the penalties.

SF Giants reset luxury tax penalties, dip under CBT threshold in 2025

The Giants had conveyed a desire to dip under the CBT threshold this season after crossing it last year. According to Cot's, they committed $250.8 million against the luxury tax last year, surpassing the CBT threshold of $237 million.

The penalties for surpassing the CBT threshold vary depending on the number of consecutive years doing it, and the amount by which they surpass that threshold.

For the Giants, the penalty was relatively modest. They had to pay a 20 percent tax on the overage, which amounted to about $2.7 million.

However, if a tax-paying team signs a player who rejects a qualifying offer, then there is a downstream effect. That team would lose their second-and-fifth-highest selections in the upcoming draft, and $1 million in international bonus pool money.

Of course, the Giants signed Willy Adames last offseason. He rejected a qualifying offer from the Milwaukee Brewers.

The Giants lost two picks in the 2025 draft, and should have one of the lowest bonus pools in the 2026 international free agency cycle, so they are still feeling the downstream effect of that.

On the other hand, Adames became the first Giants hitter in 21 years to reach 30 home runs in a season. They will almost certainly get better value than the lost bonus capital from the signing.

The good news is that the Giants reset these penalties in 2025. According to Cot's, they committed $217.9 million against the luxury tax. That was $23.1 million below the $241 million CBT threshold, so the Giants cleared that with ease.

As the offseason gets underway, the Giants' first order of business will be hiring a new manager, and filling out the coaching staff. The new manager will likely not retain most of the current coaching staff. Bench coach Ryan Christenson and third base coach Matt Williams have already signaled their departures.

The Giants will begin the offseason with only six players under guaranteed deals. This includes Rafael Devers, Matt Chapman, Willy Adames, Jung Hoo Lee, Logan Webb, and Robbie Ray. Joey Lucchesi and Andrew Knizner are eligible for arbitration. Patrick Bailey and Ryan Walker may attain Super 2 status, meaning that they would also be eligible for arbitration.

That said, arbitration raises will amount to a relatively small part of the overall payroll. The CBT threshold for 2026 is at $244 million, so the Giants will have a lot of flexibility below that mark when the offseason starts.

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