NEW YORK — The New York Yankees lowered spending on players by $12 million this year, cutting payroll by $5 million and slashing their major league-leading luxury tax by more than $7 million.

NEW YORK — The New York Yankees lowered spending on players by $12 million this year, cutting payroll by $5 million and slashing their major league-leading luxury tax by more than $7 million.

New York was hit with an $18 million luxury tax Tuesday by Major League Baseball. The tax was New York's lowest since 2003 and down from $25.7 million last year, when the Yankees won the World Series.

"Atta baby. And right now we're in the $170s," Yankees general manager Brian Cashman said, looking ahead to his 2011 payroll.

Season-ending payroll information and the tax was sent to teams Tuesday and obtained by The Associated Press.

Boston is the only other team that will have to pay. The Red Sox, who missed the playoffs this year, exceeded the payroll threshold for the first time since 2007 and owe $1.49 million.

According to the collective bargaining agreement, the Yankees and Red Sox must send checks to the commissioner's office by Jan. 31.

Since the current tax began in 2003, the Yankees have run up a bill of $192.2 million. The only other teams to pay are Boston ($15.34 million), Detroit ($1.3 million) and the Los Angeles Angels ($927,000).

New York's payroll was $215.1 million for the purpose of the luxury tax, down from $226.2 million, and the Yankees pay at a 40 percent rate for the amount over the threshold, which rose from $162 million to $170 million. Boston's luxury-tax payroll was $176.6 million, and the Red Sox pay at a 22.5 percent rate.

"We're doing a better job of managing our payroll and managing our decision-making as we enter the free-agent market," Cashman said. "Our payroll doesn't necessarily have to live at that level, but it's nice to know that our owners are committed to allow us to get there if we need to."

Overall payroll dropped by $2.3 million to $2.912 billion.

Payroll figures are for 40-man rosters and include salaries and prorated shares of signing bonuses, earned incentive bonuses, non-cash compensation, buyouts of unexercised options and cash transactions, such as money included in trades.