Your unused PTO is either a wage claim or a conditional benefit depending on one thing: your state. This calculator values your balance at your real wage, shows the after-tax cash figure using your actual marginal rate, quantifies what waiting for a raise is worth, and flags the states where a written policy can legally pay you nothing.
Termination details — policy and timing decide whether you see this money at all.
Situation: You resign after seven years with 240 unused hours at $34.00/hour. California treats accrued vacation as earned wages, payable at termination.
Calculation: 240 h x $34.00 = $8,160 gross. At a 28% combined marginal rate the lump sum nets about $5,875.
Timing rule: California requires final wages, including vacation payout, at the time of termination. Waiting more than the statutory window entitles you to waiting-time penalties equal to a full day of pay per day of delay, up to 30 days.
Situation: You quit with 96 hours banked. Your state permits a written use-it-or-lose-it policy and your handbook explicitly forfeits unused PTO on voluntary resignation.
Result: The payout is $0. The hours are worth nothing at termination — but they were fully usable while employed.
The right move in hindsight: 96 hours is 12 full working days. Booking them before your notice period ends converts the hours to paid time off, which is worth the full $2,688 at a $28 wage — far more than a forfeited balance.
Situation: You have 160 hours banked at $25.00/hour. Your annual raise of 8% takes effect in ten weeks, lifting your rate to $27.00/hour, and your company pays out at the rate in effect when the time is taken or paid.
Calculation: Cashing out now yields $4,000 gross. Waiting ten weeks yields $4,320 gross — $320 more for the same hours, an 8% return in under three months.
Caveat: This only works where the payout rate is the current wage. Some employers pay accrued PTO at the rate when it was earned, which can be lower. Check the handbook wording.
Applicable rate = wage at termination, or the frozen earned-rate under some policies
Net payout = Gross × (1 − combined marginal rate)
Raise gain = Hours × (Raised rate − Current rate)
Days off = Hours ÷ 8 (for a standard workday)
| State | Vacation Payable on Resignation? | Notes |
|---|---|---|
| California | Yes — always | Accrued vacation is wages; waiting-time penalties apply |
| Colorado | Yes — always | Based on the rate in the last pay period worked |
| Illinois | Yes (with exceptions) | Payable per contract or written policy; no forfeiture of earned time |
| Massachusetts | Yes — always | Legislative change removed employer discretion |
| Montana | Yes if promised | Required when the employer has a written payout policy |
| North Dakota | Yes if promised | Payout required only where the employer established one |
| Texas | Per policy | No statute requires vacation payout |
| Florida | Per policy | Use-it-or-lose-it permitted if written and unambiguous |
Roughly half the states follow the "earned wages" view (payout required), and the rest let a clear written policy govern. When policy is silent, most courts and labor agencies read forfeiture narrowly.
Almost every state that requires vacation payout on termination treats sick leave separately, and most do not require it to be paid out. Seven states require sick-leave payout only if the employer promised it in writing. If your balance is split between vacation and sick banks, the calculator's payout figure applies to the vacation portion; enter the sick hours separately to see what you are actually forfeiting. A combined "PTO bank" is treated under the vacation rule in most earned-wages states precisely because it becomes indistinguishable once merged.
Practical rule: if your employer merges vacation and sick into one bank, most earned-wages states treat the entire combined balance as payable.
In roughly half the United States, yes. Those states classify accrued vacation as earned wages, which makes it a debt the employer owes you the moment you separate — regardless of whether you resigned or were let go, and regardless of anything the handbook says about forfeiture. Written policy cannot override the statute in those states.
In the other half, PTO is a conditional benefit governed by policy. An employer with a clear, unambiguous, written use-it-or-lose-it policy can lawfully pay you nothing on resignation. The word doing all the work is unambiguous: courts read forfeiture clauses strictly, and a policy that is vague about which balances forfeit, or never communicated, has repeatedly been held unenforceable.
Two consequences follow. First, in every state, the practical move is the same — take the time before you give notice. Booked PTO is worth 100% of its value; a banked balance is worth somewhere between 100% and zero depending on a rule you may not have read. Second, if you are in an earned-wages state and your employer refuses to pay, you have a wage claim, typically with the state labor commissioner, and sometimes with statutory penalties that exceed the balance itself.
The payout question is really a choice between three uses of the same hours, and only one of them is usually the best answer.
Full value at your wage, taxed as ordinary income and often withheld at the flat 22% supplemental rate. For anyone in the 24% bracket or higher, that flat rate under-withholds and the gap lands on your April tax bill.
Paid time at your effective wage — and, critically, it does not add to your taxable income if you were already going to be paid for those days. Fifteen days of banked PTO is fifteen paid days you never worked.
Where the payout rate is your wage at termination, every banked hour appreciates with your salary. An 8% raise lifts a 120-hour bank by $336 for no additional work, often inside a single quarter.
If your employer caps accrual, hours above the cap stop accruing. A capped bank is a depreciating asset — it stops growing, and in a policy state it can still be forfeited entirely.
A PTO payout is not a special category of income. It is ordinary W-2 wages: subject to federal income tax, Social Security and Medicare, and reported in Box 1 of your W-2. Most payroll systems treat it as a supplemental wage and withhold at the optional flat 22% federal rate, unless you had under $1 million of supplemental wages and the employer chooses the aggregate method instead.
That flat 22% is the trap. If your combined marginal rate is 24%, 32% or higher, a large payout systematically under-withholds, and the shortfall shows up as a reduced refund or a balance due in April. The calculator's after-tax figure uses the marginal rate you enter rather than assuming 22%, which is the more useful number for anyone above the 22% bracket. Enter your true combined federal, state and local marginal rate for the most realistic net figure.
In roughly half the United States, yes. Those states classify accrued vacation as earned wages, which makes it a debt the employer owes the moment you separate — whether you resigned or were let go, and regardless of what the handbook says about forfeiture. Written policy cannot override the statute in those states.
In the other half, PTO is a conditional benefit governed by policy. An employer with a clear, unambiguous, written use-it-or-lose-it policy can lawfully pay nothing on resignation. The word doing all the work is unambiguous: courts read forfeiture clauses strictly, and a policy that is vague about which balances forfeit, or was never communicated, has repeatedly been held unenforceable.
Two consequences follow. First, the practical move is the same in every state — take the time before you give notice. Booked PTO is worth 100% of its value; a banked balance is worth somewhere between 100% and zero depending on a rule you may never have read. Second, in an earned-wages state a refusal to pay is a wage claim, usually filed with the state labor commissioner, and often carries statutory penalties that exceed the balance itself.
The payout question is really a choice between four uses of the same hours, and only one of them is usually the best answer.
Full value at your wage, taxed as ordinary income and usually withheld at the flat 22% supplemental rate. For anyone in the 24% bracket or higher that rate under-withholds, and the gap lands on your April tax bill.
Paid time at your effective wage with no added tax liability, because you were going to be paid for those days anyway. Fifteen days of banked PTO is fifteen paid days you never worked.
Where the payout rate is your wage at termination, every banked hour appreciates with your salary. An 8% raise lifts a 120-hour bank by $336 for no additional work, often inside one quarter.
If your employer caps accrual, hours above the cap stop accruing. A capped bank is a depreciating asset: it stops growing, and in a policy state it can still be forfeited entirely.
A PTO payout is not a special category of income. It is ordinary W-2 wages: subject to federal income tax, Social Security and Medicare, and reported in Box 1 of your W-2. Most payroll systems treat it as a supplemental wage and withhold federal tax at the optional flat 22% rate, unless the employer elects the aggregate method instead.
That flat 22% is the trap. If your combined marginal rate is 24%, 32% or higher, a large payout systematically under-withholds and the shortfall appears as a reduced refund or a balance due in April. The after-tax figure above uses the marginal rate you enter rather than assuming 22%, which is the more useful number for anyone above the 22% bracket. Enter your true combined federal, state and local marginal rate for the most realistic net figure.
⚠️ Important Disclaimer: Vacation-payout law varies by state and changes through legislation and case law, and individual employer policies can differ materially from the general rules described here. This tool provides estimates for planning only and is not legal or tax advice. Confirm your entitlement with your state labor agency or an employment attorney before acting on any figure.