PTO payout calculator
Work out what unused vacation is worth when an employee leaves, and how much of the payout they take home after tax.
Pay
40 hours a week is 2,080 hours a year.
Unused PTO
The balance left on the employee's last day of work.
Used to convert between days and hours.
If the policy limits the payout. Leave empty to pay it all.
Tax estimate
Payouts are supplemental wages, so federal tax is usually withheld at a flat 22%.
Leave at 0 in states without income tax.
PTO payout before tax
$2,500.00
80 hours × $31.25 an hour
- Hourly rate
- $31.25
- Hours paid
- 80
- Days paid
- 10
Estimated take-home
$1,758.75
- Gross payout
- $2,500.00
- Federal tax (22%)
- − $550.00
- Social Security (6.2%)
- − $155.00
- Medicare (1.45%)
- − $36.25
What is a PTO payout?
A PTO payout is the money an employee receives for paid time off they earned but did not take. It usually happens when someone leaves the company, and is paid with their final paycheck. Some employers also cash out part of a balance once a year instead of letting it roll over.
How to calculate a PTO payout
PTO payout = unused PTO hours × hourly rate
For hourly employees, use their regular rate of pay. For salaried employees, turn the salary into an hourly rate first:
Hourly rate = annual salary ÷ (hours a week × 52)
An employee on $65,000 a year working 40 hours a week earns $65,000 ÷ 2,080 = $31.25 an hour. With 10 unused days of 8 hours, their payout is 80 × $31.25 = $2,500 before tax.
PTO payouts by salary
What unused PTO is worth before tax, for a 40-hour week:
| Salary | 40 hours (5 days) | 80 hours (10 days) | 120 hours (15 days) |
|---|---|---|---|
| $50,000 ($24.04/h) | $961.54 | $1,923.08 | $2,884.62 |
| $65,000 ($31.25/h) | $1,250 | $2,500 | $3,750 |
| $80,000 ($38.46/h) | $1,538.46 | $3,076.92 | $4,615.38 |
| $100,000 ($48.08/h) | $1,923.08 | $3,846.15 | $5,769.23 |
How PTO payouts are taxed
The IRS treats a PTO payout as supplemental wages, like a bonus. Employers can withhold federal income tax at a flat 22% instead of using the employee’s W-4, and also withhold 6.2% for Social Security and 1.45% for Medicare. Most states with an income tax have their own supplemental rate too.
Withholding is only an estimate of the tax owed. When the employee files their return, the payout is taxed as ordinary income at their real rate, so they may get some of the withholding back.
States that require PTO payout
No federal law requires employers to pay out unused PTO. These states generally treat earned vacation as wages that must be paid when someone leaves:
| State | Rule |
|---|---|
| California | Vacation is earned wages; “use it or lose it” is not allowed. |
| Colorado | All earned, unused vacation must be paid, whatever the policy says. |
| Illinois | Earned vacation must be paid; PTO given in place of vacation counts too. |
| Louisiana | Earned vacation must be paid; policies cannot forfeit it at separation. |
| Massachusetts | Vacation pay is treated as wages and due with the final paycheck. |
| Montana | Earned vacation is wages unless the policy clearly sets out otherwise. |
| Nebraska | Earned but unused vacation must be paid; forfeiture policies are void. |
| North Dakota | Must be paid, with narrow exceptions for short-tenured employees. |
| Rhode Island | Required after one year of service. |
In most other states, payout depends on the employer’s written policy or the employment contract. If the policy promises a payout, courts usually enforce it.
Payout rules change and have exceptions, for example for sick leave, employees fired for cause or those who leave without notice. Use this calculator for planning, and confirm the rules that apply with your state labor department or an employment adviser.
How this calculator counts
- Salaries are converted to an hourly rate over 52 weeks of the hours entered.
- Tax is estimated with the flat 22% federal supplemental rate, 6.2% Social Security and 1.45% Medicare. It does not account for the Social Security wage base, the 37% rate on supplemental wages over $1 million, or local taxes.
- Days paid are counted with the hours in a workday entered. To work out the balance itself, use the PTO accrual calculator.
Frequently asked questions
How do you calculate a PTO payout?
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Multiply the unused PTO hours by the employee's hourly rate. For salaried employees, divide the annual salary by 2,080 hours (40 hours × 52 weeks) to get the hourly rate. A $78,000 salary is $37.50 an hour, so 60 unused hours pay out $2,250 before tax.
How much tax is taken out of a PTO payout?
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A PTO payout counts as supplemental wages, so employers usually withhold federal income tax at a flat 22%, plus 6.2% for Social Security and 1.45% for Medicare, and any state income tax. That is about 30% before state tax. The final tax owed is settled when the employee files their return, so some of it may come back as a refund.
Do employers have to pay out unused PTO?
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There is no federal law requiring it. A handful of states, including California, Colorado, Illinois, Massachusetts and Nebraska, treat earned vacation as wages that must be paid when employment ends. Elsewhere it usually depends on the employer's written policy or employment contract.
Is sick leave paid out when you leave?
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Usually not. Most state paid sick leave laws do not require unused sick time to be paid out. If an employer combines vacation and sick time into a single PTO bank, though, states that require vacation payout often treat the whole PTO balance as payable.
When is a PTO payout paid?
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Most employers include it in the final paycheck. Deadlines for the final paycheck vary by state: in California it is due on the last day for employees who are let go, and within 72 hours for those who quit without notice. Other states allow until the next regular payday.
Is a PTO payout taxed more than a regular paycheck?
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It is not taxed at a higher rate, but it can be withheld at a higher rate. The flat 22% federal withholding may be more than an employee's usual rate, especially when the payout lands in the same paycheck as regular wages. Any overpayment is returned at tax time.