Merrill Kelly rejected Padres’ lucrative contract offer due to California’s ridiculous tax laws

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Once California tax laws entered the equation, two was greater than three for Merrill Kelly.

The math was done by the veteran pitcher at some point this offseason, when he was a free agent deciding between two options for his MLB future.

No. 1 was a two-year, $40 million contract with the Diamondbacks. No. 2, at least on paper, seemed better.

When it came down to the Padres and Diamondbacks for Merrill Kelly this offseason, he said he chose Arizona due to California’s tax laws. Getty Images

It was a three-year, fully guaranteed deal with the Padres that appeared to have a similar average annual value.

Kelly, though, chose the former — and during a sitdown interview with Foul Territory’s Scott Braun and A.J. Pierzynski this week, explained the decision was almost entirely due to the Golden State’s tax system.

“I don’t think it’s any secret on how much money you get taken out of your pocket when you go to California,” the 37-year-old right-hander said.

There were, of course, other factors that pulled Kelly toward Arizona. He went to high school at Desert Mountain in Scottsdale and played collegiately at Arizona State.

And, the father of two young kids has called the Phoenix area home while logging innings for the Snakes in each of the past seven seasons.

“Coming back here,” he admitted, “it was always the priority.”

But after Pierzynski jokingly told him he was “the first person ever that’s been offered a bunch of money to go live in San Diego and said no,” Kelly made it crystal clear that giving away a significant portion of his income to a state government was ultimately a dealbreaker for him.

“I love San Diego,” Kelly said. “It’s just, like I said, they take too much money out of my pocket, man. The taxes over there are a different level.

“We had my numbers guy run the numbers, and it just made more sense to come home.”


Arizona Diamondbacks pitcher Merrill Kelly (29) poses for a photo for MLB media day.
Merrill Kelly has logged innings for the Diamondbacks in each of the last seven seasons. Allan Henry-Imagn Images

If he had opted for the Padres’ offer, Kelly was likely staring down a state income tax in the ballpark of 13 percent. A far more palatable 2.5 percent state income tax rate was part of his Diamondbacks deal.

“It worked out best for us because that was honestly our second choice,” Kelly said. “It was between here and San Diego going into the offseason. San Diego was really the only place that, if we did go somewhere, that was probably high on our list if we weren’t in Arizona. It’s like, ‘All right, let’s just hop over and take a short, six-hour drive to San Diego.’

“But, yeah, the desert is home. I guess we’re not ocean people.”

The Padres — who told The California Post on Friday, when asked for a statement on Kelly’s remarks that they “do not comment on contract negotiations” — could have certainly used the pitcher’s arm on their roster this season.

In 184 innings last year (split between the Diamondbacks and Rangers following a trade at the MLB’s summer deadline), he boasted a 12-9 record with a 3.52 ERA and 167 strikeouts.

Baseball Reference projects him to own a 10-7 record with a. 3.79 ERA and 145 strikeouts in 2026, though Kelly did confirm this week the start of his season will be delayed due to a back injury.

The Padres will now head into ’26 with a starting rotation anchored by Michael King, Joe Musgrove and Nick Pivetta — and a big wonder of what if California’s tax laws were just a little less strenuous.

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