Merrill Kelly chooses Arizona over San Diego due to taxes. [Image Source: YIMG]
Merrill Kelly has decided to remain with the Arizona Diamondbacks for the 2026 MLBseason, turning down an offer from the San Diego Padres. The right-hander’s choice was largely influenced by California’s steep income tax compared to Arizona’s lower rates.
Details of Kelly’s Contract and Tax Considerations
After spending 10 games with the Texas Rangers in 2025, Kelly entered free agency and ultimately agreed to a two-year, $40 million contract with Arizona. The Padres reportedly presented a comparable offer with a three-year term, but the significant tax difference was a decisive factor. In California, income above $1 million faces a 13% tax rate, whereas Arizona’s state income tax is about 2.5%.
Kelly explained the financial impact in an interview with Foul Territory, stating,
“I don’t think it’s any secret on how much money you get taken out of your pocket when you go to California,”
underscoring how taxes affected his decision.
Personal and Professional Ties to Arizona
Kelly spent the early part of his career with the Diamondbacks and has strong connections to Arizona, having attended high school and Arizona State University. Returning to Arizona was always a priority for him, as he emphasized the personal preference behind his decision.
While fond of San Diego’s environment, Kelly said the tax burden was too heavy to accept.
“I love San Diego, it’s just, like I said, they take too much money out of my pocket, man. The taxes over there are a different level,”
he said.
Kelly also noted that after running the finances with his team, coming back home to Arizona was the more logical choice.
Image of: Merrill Kelly
“We had my numbers guy run the numbers, and it just made more sense to come home,”
he added.
Lifestyle Preferences Between Arizona and California
Beyond finances, Kelly expressed a preference for Arizona’s desert landscape, joking that he and his family are not “ocean people.” Reflecting on the offseason choices, he said,
“It worked out best for us because that was honestly our second choice. 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.”
Team Responses and Kelly’s Recent Performance
The Padres declined to comment on contract negotiations when approached by The California Post. Meanwhile, Kelly’s 2025 season included a midyear trade to Texas, where he posted a combined 12-9 record split between the Rangers and Diamondbacks.
Kelly’s return to Arizona not only reflects financial and personal considerations but also highlights how state tax policies can influence athletes’ decisions in free agency, potentially affecting team compositions and regional talent retention in Major League Baseball.
Merrill Kelly reveals he had a three-year offer from the Padres on the table.
