PTO Payout Calculator (2026)
Calculate what your unused PTO is worth at separation. Enter unused hours and your hourly rate — see the gross payout, typical tax withholding, and whether your state requires it.
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How a PTO payout is valued
The formula is simple: unused hours × your hourly rate. If you know your hourly rate, that's the whole calculation. If you're salaried, the standard conversion is:
Hourly rate = annual salary ÷ (hours per week × 52)
A $80,000 salary at 40 hours a week is $80,000 ÷ 2,080 = $38.46/hour. (2,080 = 40 × 52, the standard full-time year.) Select "Compute from my annual salary" in the calculator and it does this for you.
Two things people consistently get wrong: first, the payout is based on your final rate of pay — if you got a raise in March and quit in October, those banked hours are worth the October rate. Second, the payout is wages, not a bonus: it's subject to income tax, Social Security, and Medicare like any paycheck.
The state patchwork: who actually owes you this money
This is the part that surprises people: whether you get a payout at all depends on where you work, not on fairness.
A group of states treats accrued vacation as earned wages that must be paid out at separation, no matter what the handbook says. As of 2026, the commonly cited members of this group are California (Labor Code §227.3 — the strictest: accrued vacation can't be forfeited, and "use it or lose it" policies are void), Colorado, Illinois, Louisiana, Massachusetts, Montana, Nebraska, and North Dakota. State legislatures do amend these rules, so treat this list as a starting point, not legal advice.
In most other states, there is no payout statute — your employer's written policy is the entire law of the matter. If the handbook says unused vacation is paid out, it's owed; if it says it's forfeited, it's gone. This is why the single most valuable sentence in this article is: read your handbook's PTO section before you need it, and check your state labor department's website for the current rule.
A few nuances worth knowing:
- Accrual caps vs. forfeiture. Even in strict states like California, employers may cap accrual (stop earning at 1.5× your annual grant). Capping future earning is legal; confiscating earned hours is not.
- Vacation vs. sick leave. Payout laws cover vacation/PTO. Sick leave is excluded almost everywhere.
- Timing. States with payout laws typically require payment on your final paycheck or within a set number of days — California requires it immediately at termination.
Worked example: 40 hours at $35/hour
| Step | Math | Result |
|---|---|---|
| Unused PTO | — | 40 hours |
| Hourly rate | — | $35.00 |
| Gross payout | 40 × $35 | $1,400 |
| Federal withholding (22% supplemental rate) | $1,400 × 22% | −$308 |
| After federal withholding | $1,092 |
State income tax and FICA (7.65%) come out on top of that — the $1,092 is before those. And the salary-conversion version: $80,000 ÷ 2,080 = $38.46/hour, so 20 unused hours = $769.23 gross.
Check your handbook first — a short checklist
Before you count on any number this calculator produces, verify three things: (1) Does your employer's policy pay out unused vacation at separation? (2) Is there an accrual cap you've already hit? (Some people discover their balance stopped growing months ago.) (3) What's your state's current law? — search "[your state] labor department vacation payout" and read the official page, not a blog summary. If the policy and the law disagree, the law wins.
Data sources and assumptions
- California: Labor Code §227.3 — accrued vacation is vested wages; forfeiture and "use it or lose it" void. Other payout-requirement states listed reflect commonly cited 2026 summaries; verify with your state labor department, as statutes change.
- Federal withholding: IRS supplemental-wage flat rate of 22% (2026), per IRS Publication 15. Your actual tax liability depends on your marginal rate — the difference settles at filing time.
- Hourly conversion: 2,080 hours/year (40 × 52) standard full-time assumption; adjust hours/week if you work a different schedule.
Frequently asked questions
Is my PTO payout taxed?
Yes — it's ordinary wage income, taxed exactly like a paycheck. The one quirk is withholding: because it's a lump sum, employers typically withhold federal income tax at the 22% flat supplemental-wage rate (per IRS rules for 2026), which may be higher or lower than your actual marginal rate. You'll settle the difference on your tax return. State tax and FICA apply normally.
Does unused sick leave get paid out too?
Almost never. In every state, the payout rules we're describing apply to vacation/PTO — sick leave is generally excluded unless your employer's policy explicitly says otherwise. A few cities and states with mandatory paid sick leave laws require carryover of sick hours, but that's the right to use them later, not a cash payout.
Can my employer cap how much vacation I accrue?
In most states, yes — accrual caps are legal and common ('you stop earning vacation once your balance hits 1.5× your annual allotment'). What's banned in several states, notably California, is 'use it or lose it' forfeiture: an employer can stop the accrual clock, but can't confiscate hours you've already earned. Check your handbook for the cap, not just the accrual rate.
I was fired. Do I still get my PTO payout?
In states that require vacation payout by law, yes — the reason for separation doesn't matter; earned vacation is earned wages. In states where payout is governed by company policy, the policy controls, and some policies exclude payouts for terminations 'for cause.' If you're in a gray area and the amount is meaningful, your state labor department (not HR) is the authority to ask.
Should I use my PTO before quitting, or take the payout?
Usually, take the time off. A payout is taxed as a lump sum and gives you no rest; time off is tax-free in the only currency that matters — actual rest. The payout matters most when you can't use the time (you're laid off, or the notice period is too short). One more angle: in states without payout laws, unused PTO you can't take is simply gone — so check your balance months before any planned departure.
Estimates only, not tax or financial advice. Figures reflect the 2026 tax year. Verify important decisions with the IRS or a qualified tax professional.