PTO payout calculator

Your payout after withholding

Why a payout feels overtaxed

Payroll does not run a PTO check through your W-4 the way it runs your salary. IRS Publication 15 treats an annual lump-sum payment for unused vacation leave as a supplemental wage payment (Publication 15), and where the employer identifies supplemental wages separately from regular wages and withheld income tax from your regular wages in the current or immediately preceding calendar year, one permitted method is to withhold a single flat percentage, with no other percentage allowed under that method (Publication 15, section 7). Take the same hours as time off instead and the money is withheld on as if it were a regular wage payment (Publication 15). Same hours, same rate, different withholding.

Payroll taxes do not care which bucket the money came from. Social Security is charged at one rate to you and the same rate to your employer (IRS Tax Topic 751) and stops once your wages for the year pass the annual wage base limit that same page publishes (Tax Topic 751), which is why a December payout often carries no Social Security line while the identical payout in March carries a full one. The tool checks your salary against that base before it charges the line. Medicare is charged at its own matched rate, employer and employee alike (Tax Topic 751). Past a set amount of wages in a calendar year your employer also withholds Additional Medicare Tax, without regard to filing status (Publication 15), while your own liability threshold depends on how you file (IRS Additional Medicare Tax questions and answers).

Withholding is not your tax bill

Withholding is a deposit, not a settlement. The flat supplemental amount is what leaves the check. What you owe on that money gets decided at filing, by where the payout lands in your brackets once the standard deduction for your filing status comes out (IRS, new and enhanced deductions for individuals). Someone in a low band has more taken than they owe and gets the difference back. Someone whose salary already sits high enough that the payout spills into a higher band still owes more in April.

So the tool runs the bracket engine twice, once on your salary alone and once on your salary plus the payout. The difference between those two results is the real federal tax on your banked hours, and dividing it by the gross gives your marginal rate on the payout. Set that against the flat amount withheld and you get a dollar figure in one direction or the other. Gross-hours calculators cannot produce that number, because they never ask what else you earn.

For scale on where a salary sits, average annual pay across all industries and ownerships in the United States was $78,722 for 2025 (BLS QCEW, area US000), against $96,946 in California (QCEW, area 06000) and $99,949 in New York (QCEW, area 36000). Two people with the same banked hours and very different other income get very different answers on the last line of the tool.

Whether your state makes the payout mandatory

Whether the money is owed at all is not always your employer's call. The Fair Labor Standards Act does not require payment for time not worked, such as vacations, sick leave or holidays, and leaves those benefits to agreement between an employer and an employee (U.S. Department of Labor). A handful of states override that for vacation you have already earned. Five states are verified here against their own labor department or statute, and those are the rules the tool applies. Every other state and DC is presented in the tool as governed by your employer's policy and your employment agreement, because we have not verified them.

California carries the sharpest version of the rule. Labor Code section 227.3 says all vested vacation shall be paid to a terminated employee as wages at their final rate (Labor Code 227.3), and where the employer discharges the employee, wages earned and unpaid at the time of discharge are due and payable immediately (Labor Code 201). A use-it-or-lose-it policy that forfeits vacation not used by a set date is an illegal policy under California law and will not be recognized by the Labor Commissioner, though a policy that caps further accrual is acceptable to the Labor Commissioner (DLSE vacation FAQ). Rolling vacation into a combined PTO plan does not let a California employer get around any of it (DLSE vacation FAQ).

Colorado reads the same way on naming. Paid leave counts as vacation pay owed at separation whatever the handbook calls it, including PTO, personal days, annual leave or floating holidays, and the statute says the employer shall pay upon separation all vacation pay earned (CDLE INFO #3E). Genuinely unlimited PTO is the exception the state names, and ordinarily it is not payable upon separation because the amount is not determinable (CDLE INFO #3E). Colorado employers are not required to offer paid vacation in the first place (CDLE INFO #3E), and neither are Massachusetts employers (Mass.gov) or California employers (DLSE vacation FAQ). The protection attaches to time you have already earned, not to time you wish you had.

Where these numbers come from

Every dollar the tool prints is computed in your browser from the same vetted constants the rest of StateWage runs on, injected as a whole table with its own review date. Nothing on this page is a hand-typed dollar figure. The brackets, the standard deduction, the payroll tax rates and the wage base are cross-referenced against IRS Publication 15 (Publication 15), Tax Topic 751 for the payroll tax rates and the wage base (Tax Topic 751), and the IRS Additional Medicare Tax questions and answers (Additional Medicare Tax Q and A). The tax year and the review date are stamped on the tool itself.

I wrote that engine from the primary documents rather than copying another calculator, and I maintain the 50-state rate table under it. Wiring this site's live BLS wage feed on 2026-07-28 took a day longer than it should have, because the QCEW average weekly wage series publishes quarterly only, so a weekly times 52 cross-check silently returns nothing, and because the national total sits at aggregation level 10 while state totals sit at 50. Small details, and they decide whether a published figure is real or quietly wrong. I am a builder and a primary-source reader, not a CPA, an enrolled agent or a payroll provider.

Common questions about PTO payouts

Is my PTO payout taxed at a higher rate than my salary?

Withheld differently, not taxed differently. The lump sum is a supplemental wage payment for withholding purposes (IRS Publication 15), so a flat percentage comes out at the time of payment. Your liability is settled later against your brackets and the standard deduction for your filing status (IRS). The last two lines of the tool show which way that lands for you.

Does my employer have to pay out unused PTO when I quit?

Federal law does not make them. The FLSA does not require payment for time not worked, such as vacations, and treats those benefits as a matter of agreement between employer and employee (U.S. Department of Labor). State law can. In Illinois the employer is required to pay the monetary equivalent of all earned vacation to an employee who resigns or is terminated without having taken it (Illinois DOL), and in New York whether unused time is paid depends on the terms of the vacation or resignation policy (New York State DOL).

Does Social Security come out of a PTO payout?

Yes, until your wages for the year pass the annual wage base limit that IRS Tax Topic 751 publishes for the year (IRS Tax Topic 751). Enter your regular annual salary and the tool checks your position against the base before it charges the line, which is why the payout looks different depending on when in the year you leave.

What happens if my company has unlimited PTO?

Usually there is nothing to cash out. Colorado states the reasoning plainly: genuinely unlimited PTO ordinarily is not payable upon separation, because the amount is not determinable (Colorado CDLE, INFO #3E). A plan that accrues hours you can count is the one that gets paid.

My handbook calls it PTO, not vacation. Does that change anything?

Not in the two states that address the naming directly. Colorado counts paid leave that meets its vacation pay definition whatever it is called, including PTO, personal days, annual leave or floating holidays (CDLE INFO #3E), and the California Labor Commissioner has said a combined PTO plan does not allow an employer to circumvent the law (DLSE vacation FAQ).

Can my employer wipe the balance at year end?

Depends where you work. In California a policy that forfeits vacation not used by a specified date is illegal and will not be recognized by the Labor Commissioner, while a cap on further accrual is acceptable (DLSE vacation FAQ). Illinois does not allow an employment policy to provide for a forfeiture of earned time upon separation (Illinois DOL). In New York a forfeiture is valid only if the employer told employees in writing of the conditions that nullify the benefit (New York State DOL).

Would taking the days off instead leave me better off?

On withholding, yes, at least at the moment of payment. Vacation pay for time you actually take is subject to withholding as if it were a regular wage payment (IRS Publication 15), so it follows your W-4 rather than the flat supplemental method. Your yearly tax on the money is the same either way, which is what the reconciliation line is showing you.

Related tools on StateWage

If your lump sum is a bonus rather than banked hours, the bonus tax calculator takes the dollar amount straight and skips the accrual side. If you want to see what a deferral does to your regular check, that is the 401(k) paycheck calculator.