What Your Unused Vacation Is Worth and Whether You Are Owed It

Last updated July 2, 2026

Whether unused paid time off gets paid out when you leave a job depends almost entirely on which state you work in. Eight states treat accrued vacation as earned wages, making payout mandatory at separation regardless of the reason: California, Colorado, Illinois, Louisiana, Massachusetts, Montana, Nebraska, and North Dakota. In these states, use-it-or-lose-it policies are either prohibited or severely restricted. The remaining states leave the decision to the employer's written policy, which means your employee handbook is effectively your PTO contract.

The calculation itself is straightforward once you know the rules apply. Your hourly rate multiplied by your unused hours gives you the gross payout. The IRS treats that payout as supplemental wages, with a flat federal withholding rate of 22 percent applied before the check is cut. A $3,000 gross PTO payout results in roughly $2,340 in hand after federal withholding alone, before state taxes or FICA. For employees in California, any employer who fails to pay accrued vacation at termination is potentially liable for waiting time penalties of an additional day's wages for each day of delay, up to 30 days.

State PTO payout law and the employer's written policy determine whether unused PTO has cash value at resignation or layoff. If payout is required or promised, calculate your gross amount and set aside roughly 30 percent for taxes. Do not leave that money on the table because you assumed the rules were the same everywhere.