US PTO Payout Calculator — 2025
What will your employer pay you for unused vacation when you leave?
Estimate your US PTO / vacation payout on resignation or termination. Covers state-by-state payout rules (mandatory vs at-will states), supplemental wage tax at 22% federal withholding, plus Social Security, Medicare, and state tax deductions.
Estimates only. Check your state DOL and employee handbook. Disputes can be filed with state Department of Labor or via a private claim.
How PTO payout is calculated on termination
The calculation
Step-by-step for salaried workers:
- Daily rate = Annual salary ÷ Working days per year (standard 260)
- Hourly rate = Daily rate ÷ Hours per working day
- Unused days = Unused PTO hours ÷ Hours per day
- Gross payout = Unused hours × Hourly rate
Worked example
$75,000 salary, 80 unused PTO hours, 8-hour days. Daily rate: $75,000 ÷ 260 = $288.46. Hourly: $36.06. Unused days: 80 ÷ 8 = 10 days. Gross payout: 80 × $36.06 = $2,884.62. After federal 22% supplemental ($635), Social Security 6.2% ($179), Medicare 1.45% ($42), and state tax ($144 at 5%), net is about $1,885.
Hourly workers
For hourly employees, daily rate = hourly rate × typical daily hours. Overtime rates usually don’t apply to PTO — but check your employer’s policy, especially where collective bargaining is in effect.
Which states require unused PTO to be paid out on termination?
Mandatory payout states
These states treat accrued PTO as “vested wages” — employers must pay out all unused PTO on termination regardless of policy:
| State | Rule |
|---|---|
| California | All accrued vacation/PTO is vested wages. No “use it or lose it” allowed. Payout required. |
| Colorado | PTO = earned wages (SB 20-205, 2020). Employer cannot forfeit. |
| Illinois | Vacation accrued is wages under the Wage Payment & Collection Act. |
| Montana | Accrued vacation must be paid on termination under state wage law. |
| Nebraska | Unused vacation is wages under Nebraska Wage Payment & Collection Act. |
| North Dakota | Accrued vacation is wages under ND Century Code 34-14. |
| Rhode Island | Vacation = wages on termination after 1+ year service. |
Policy-dependent states
Most states take the middle view: PTO payout is required only if the employer’s written policy, handbook, or contract promises it. Silence typically defaults to NO payout. States where this is the dominant rule: New York, New Jersey, Massachusetts, Washington, Oregon, Michigan, Virginia, and many others.
At-will / no mandate states
A minority of states — Texas, Florida, Georgia, Alabama, Louisiana — have no state-level mandate at all. Employer policy fully controls. “Use it or lose it” is legal; so is cashing out only if the handbook says so.
Penalties for non-payment
In mandatory-payout states, employers who fail to pay out PTO typically face penalties: California’s waiting-time penalty can be up to 30 days of wages on top of the PTO owed. Colorado imposes 125% penalty of wages for the first 14 days and up to 199% after 30 days. File a claim with your state DOL or consult a wage & hour attorney.
Supplemental wage withholding, FICA, and state tax
Federal supplemental wage withholding
PTO payouts, bonuses, commissions, and severance are classified as “supplemental wages” for federal withholding. Employers have two options:
- Flat 22% method: If the payout is paid separately from regular wages, employer can withhold a flat 22%. (37% if annual supplemental wages exceed $1 million.)
- Aggregate method: Payout added to a regular paycheck; federal tax withheld based on W-4 using the combined amount’s bracket.
Both methods withhold tax; your actual tax liability is determined at year-end on Form 1040. If the flat 22% is too much vs your marginal rate, you get a refund; if too little, you owe more.
FICA
Social Security (6.2% on wages up to $176,100 in 2025) and Medicare (1.45% on all wages; 2.35% on wages over $200,000 for singles). Applies to PTO payout just like regular wages. There is no supplemental-wage exemption.
State income tax
Applies at your normal marginal rate unless your state has a supplemental withholding rate (CA uses 6.6% for bonuses, some states use flat rates). No income tax states: AK, FL, NV, NH, SD, TN, TX, WA, WY.
Local tax
NYC residents pay NYC income tax ~3.9%. Philadelphia non-residents pay 3.75%. Ohio cities often 2%. Check your locality.
Retirement deferral
Most 401(k) plans don’t allow PTO deferrals (they’d have needed an HR workflow to intercept and redirect). Some plans offer “PTO to 401(k)” conversion at year-end or separation. Check with HR.
❓ Frequently askedFrequently asked questions
Is PTO payout required in the US?
Depends on state and policy. Mandatory states: California, Colorado, Illinois, Montana, Nebraska, North Dakota, Rhode Island. Most other states require payout only if the employer’s written policy promises it. Texas, Florida, Georgia, Alabama: no mandate at all — policy controls entirely.
Is PTO payout taxed differently?
Treated as supplemental wages federally. Two options: flat 22% withholding (most common for separate checks) or aggregate with regular paycheck. FICA (7.65%), state, and local tax apply normally. Year-end reconciliation on Form 1040.
Can my employer have a ‘use it or lose it’ PTO policy?
In some states yes, in others no. California bans forfeiture outright — PTO is a vested wage. Most other states allow accrual caps (employee stops accruing at max) but not retroactive forfeiture. On termination, unused PTO balance still subject to state payout rules.
Do sick days get paid out like PTO?
Almost never. Unused sick leave is generally NOT required to be paid on termination, even in states that require vacation payout. If your employer combines sick and vacation into a single PTO bank, the whole bank may be subject to payout rules — check your handbook.
What if my employer refuses to pay my PTO?
If you’re in a mandatory-payout state: file a wage claim with your state Department of Labor (usually free, no lawyer needed). Many states have waiting-time penalties on top of the wages owed. In policy-dependent states: check your employee handbook and contract; sue in small claims or consult an employment lawyer.
How long does an employer have to pay out PTO?
Varies by state. California: “immediately” if fired, within 72 hours if you quit with 72 hours notice. Colorado: next regularly scheduled payday. New York: not later than the last day of employment. Check your state DOL for specifics.