The Yankees and Dodgers are on pace to cut their luxury tax bills in 2017

The Yankees and Dodgers are poised to save millions in luxury tax this year, according to the Associated Press

Back in December, when MLB and the MLBPA agreed to the new collective bargaining agreement, the luxury tax system was overhauled to include much harsher penalties. Under the old CBA the maximum teams could be taxed was 50 percent for every dollar over the annual threshold. Now the maximum tax rate is 92 percent under certain conditions.

The new luxury tax penalties are so steep they effectively serve as a salary cap. The vast majority of teams are nowhere near the luxury tax threshold, which is $195 million in 2017. Only the big spenders are at or over the threshold, including the Yankees and Dodgers. Those two clubs are poised to cut their tax bill considerably this year, according to the Associated Press.

The Dodgers are forecast to pay a $25.1 million competitive balance tax this year, according to opening-day calculations by the commissioner's office obtained by The Associated Press, down from $43.6 million in 2015 and $31.8 million last year. The Yankees' bill is slated to be just under $9 million, their lowest since the tax began in 2003 and less than one-third of the $27.4 million they owed last season.

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The Dodgers have a major league-high $238 million payroll for purposes of the tax, which uses the average annual values of contracts for players on 40-man rosters and includes $13.96 million per team in benefit costs.

Each team's payroll for luxury tax purposes is calculated at the end of the season, so the numbers you see above are very much subject to change. Midseason trades could impact each team's luxury tax situation considerably.

Yankees owner Hal Steinbrenner has made it no secret he wants his club to get under the luxury tax threshold soon, which would reset their tax rate and save them millions. That won't happen this year. Their best chance to do it next season, when their big money contracts with Alex Rodriguez and CC Sabathia expire. Masahiro Tanaka could opt out of his deal as well.

The Yankees are in the middle of a youth movement, and if they're able to develop some core players like Gary Sanchez and Aaron Judge and Gleyber Torres while getting under the luxury tax next season, it'll set them up for a possible free agent spending spree during the 2018-19 offseason. The same is true for the Dodgers. Coincidentally enough, Bryce Harper and Manny Machado will be free agents that offseason. I'd say we should prepare for a set of massive bidding wars.