Merrill Kelly turned down the Padres’ lucrative contract offer because of California’s ridiculous tax laws

Once California tax laws came into the picture, two was bigger than three for Merrill Kelly.

The calculation was made by the veteran pitcher sometime this offseason when, as a free agent, he had to decide 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.

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

Kelly, however, opted for the former — and during a sitdown interview with Foul Territory’s Scott Braun and AJ Pierzynski this week, he explained that the decision was almost entirely due to the Golden State’s tax system.

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

Of course, there were other factors that drew Kelly to Arizona. He attended high school at Desert Mountain in Scottsdale and played collegiately at Arizona State.

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

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

But after Pierzynski jokingly told him he was “the first person ever to be offered a bunch of money to live in San Diego and say 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’re taking too much money out of my pocket, man. The taxes there are on a different level.”

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

Had he chosen the Padres’ offer, Kelly likely would have faced a 13 percent state income tax bill. A much more palatable 2.5 percent income tax rate was part of his Diamondbacks deal.

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

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

The Padres — who told The California Post on Friday, when asked for a statement about Kelly’s comments, that they “do not comment on contract negotiations” — certainly could have 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 summer deadline), he had 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, although Kelly did confirm this week that the start of his season will be delayed due to a back injury.

The Padres now enter ’26 with a starting rotation anchored by Michael King, Joe Musgrove and Nick Pivetta – and the great wonder that California’s tax laws would be a little less strict.

Download the California Post app, follow us on social media and subscribe to our newsletters