Merrill Kelly Chose The Diamondbacks Over The Padres Because Of California's High State Income Tax

Pitcher Merrill Kelly signed his first Major League Baseball contract with the Arizona Diamondbacks in 2018. He's spent the bulk of his career there, and after the team traded him to the Texas Rangers midway through the 2025 season, Kelly returned to Arizona this offseason. He agreed to a two-year, $40 million deal in December.

At the time, Kelly expressed his interest in returning as a fondness for the city and belief in the team's roster. But Kelly more recently shared another reason why he chose the Diamondbacks. While chatting with Foul Territory, Kelly revealed he was weighing another offer.

"There was a team out in California, I think everyone can pretty much figure out who that was. There was a three-year offer guaranteed on the table. I don't think it's any secret on how much money you get taken out of your pocket when you go to California. There was a lot of factors that went into the three-year deal. It was definitely enticing. It definitely made the decision a lot harder to come back here, but once Arizona got to kind of the number that they did, it just made a lot more sense to come back here."

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That other offer was from the San Diego Padres, who were giving Kelly $40 million over three seasons. Sure, it was spread out over an extra season, but Kelly would have received the same amount of money…at least, in terms of pre-tax earnings.

Arizona has a flat 2.5% state income tax rate. California has a graduated-rate tax based on the amount of income being taxed. For anything above $742,954, the tax rate is 12.3%. And to add insult to injury, anyone making $1 million or more pays an extra 1% in payroll tax.

If he signed with the Padres, Kelly would be paying $5,300,116 in state income taxes over the duration of the deal. With his Diamondbacks deal, he'll owe $1 million in state income taxes. That's a total of $4,300,116 more going into Kelly's bank account.

This isn't the only time we've seen a player try to avoid paying California taxes. Shohei Ohtani's record-setting $700 million deal includes tons of deferred money; he could very well be retired and living outside of the state by the time he earns it.

Per Spotrac, Kelly has made about $36.6 million throughout his career so far. He's 37 years old, so this is likely one of the last contracts he'll sign as a major leaguer. He's trying to maximize the amount he gets to keep.