Free agent first baseman Pete Alonso is reportedly near a decision on where he’ll play next season, with the New York Mets—where he has played his entire MLB career—and the Toronto Blue Jays considered the frontrunners.
The choice between New York and Toronto provides the Blue Jays with an unusual tax advantage: Alonso would save on taxes by choosing to sign in Canada with the Blue Jays rather than remaining in the Big Apple.
The Mets and the New York Yankees, along with other pro teams in New York, are usually among the most taxing options for a free agent. New York’s highest level of income tax is 10.9%, the third highest in the country after California (13.3%) and Hawaii (11%). New York City only taxes residents. Those taxes are in addition to federal income taxes, where the highest rate is 37% but is set to climb to 39.6% beginning in 2026 unless President Donald Trump and Congress extend provisions of the Tax Cuts and Jobs Act of 2017 or pass another tax law.
If Alonso opts to play for the Blue Jays, he’d be subject to Canada’s federal and provincial highest income tax rate of up to 53.53% on his Canadian source income. On the surface, the higher Canadian tax rate would appear to be a disincentive to coming to Canada. However, the income tax treaty between Canada and the United States offers a unique opportunity to pay a reduced rate of tax on a properly structured signing bonus payment.
To illustrate the tax impact on Alonso’s choice, imagine that the Mets and Blue Jays offer him the same contract: three years, $70 million which includes a $20 million signing bonus. For purposes of this illustration, we assume that Alonso, who is from Florida and reportedly lives there, is a Florida resident. That is important since Florida does not levy a state income tax. We also assume that Trump and a Republican-controlled Congress will extend the existing 37% tax rate beyond 2025.
If Alonso signs with the Mets for $70 million, he’ll owe the U.S. federal government $25.9 million in taxes. Alonso will also owe the state of New York $2.73 million on the non-signing bonus portion of the deal ($50 million), meaning a combined income tax of $28.63 million ($25.9 million + $2.73 million). But as a Florida resident, Alonso will not pay New York for the $20 million signing bonus, meaning he’d save $2.18 million that he would have otherwise paid as a New York resident. He also avoids New York City resident taxes.
As for Alonso signing with the Blue Jays for the same proposed $70 million contract terms, we consulted with Daren Raoux, CPA of BDO Canada. Raoux explains that Canada (and Ontario) will tax Alonso based on days spent working up north. Alonso’s signing bonus, if properly structured, would benefit from the 15% preferential tax rate as provided in the U.S-Canada Income Tax Convention Raoux estimates that Alonso would pay a combined $13.65 million to Canada and Ontario. This figure reflects Alonso spending 40% of his duty days in Canada. As Raoux notes, Alonso would be required to pay U.S. federal income taxes on the remaining 60% of duty days. We calculate that figure to be $12.25 million, meaning a combined income tax of $25.9 million ($13.65 million + $12.25 million).
In short, if Alonso signs with the Mets, he’d pay roughly $28.63 million in income taxes while if he signs with the Blue Jays, he’d pay approximately $25.9 million—a difference of about $2.73 million.
To be clear, these calculations are mere estimates and are undoubtedly incomplete. Alonso would pay other taxes, including payroll taxes (Social Security tax, Medicare tax and the Medicare surcharge) and state jock taxes, and if he owns property, he’d pay taxes on it. Working in the other direction, the 30-year-old, four-time All-Star could have deductions and expenses that offset some of the tax impact. Alonso could also be traded during his contract, which would likely impact his taxes, and tax laws in the U.S. and Canada can change.
But the short of it: Alonso would take home more pay by signing with the Blue Jays if both teams offered him the same deal.
