When you resign or get let go, unused vacation is often money your employer still owes you. This works out how much.
The number depends on three things: your hours, the rate they must use, and whether your state forces a payout at all.
Rate adjustments and tax
Shift differentials, non discretionary bonuses, and commissions can raise the rate your payout must use. Add the hourly value here.
Most employers pay full value. Some pay less on unused time where state law allows it.
Nine states have no income tax. Leave this at 0 if yours is one of them.
| Vacation hours being paid | 0 |
| Base rate | $0.00 |
| Rate used after extras | $0.00 |
| Gross vacation pay | $0.00 |
| Federal withholding | $0.00 |
| Social Security and Medicare | $0.00 |
| State withholding | $0.00 |
| Estimated net | $0.00 |
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This is an estimate. Whether your employer must pay you at all depends on your state and your written policy. Your final payslip is the official figure.
The basic sum
Unused vacation hours x your pay rate = gross vacation pay
Eighty hours at $25 an hour is $2,000 before tax.
That is the easy part. The two questions that actually decide your payout are which rate applies, and whether you are entitled to anything.
The rate your employer has to use
Most people assume their base hourly rate. Often it is higher than that.
Salaried staff
need the salary converted first. Divide your annual pay by your weekly hours multiplied by 52. Someone on $65,000 for a 40 hour week is on $31.25 an hour.
Shift differentials
usually count. If you regularly earn an extra $2 an hour for nights, that often belongs in the rate.
Non discretionary bonuses
count in many cases. A bonus you earn by hitting a target is part of your regular pay. A surprise holiday gift is not.
Commissions
count for commissioned staff, usually averaged over a recent period.
Overtime premiums
normally do not. Vacation is paid at a straight rate, not time and a half.
A recent raise
matters. Most employers must pay out at your final rate, not the rate you were on when the days were earned. That is worth checking if you were promoted recently.
Add anything extra into the rate adjustments field in the calculator and it recalculates for you.
Does your state make them pay?
There is no federal rule requiring a vacation payout. It comes down to state law and what your handbook says.
States that treat accrued vacation as earned wages.
Your employer must pay it when you leave, and a policy saying otherwise does not override the law. California, Colorado, Montana, and Nebraska work this way.
States that follow your employer’s written policy.
The majority. If the handbook promises a payout, they have to honour it. If it says unused time is forfeited, it usually is.
States that allow forfeiture outright.
Some permit an employer to wipe the balance on exit as long as the policy was written down and staff were told.
Two things change the answer even inside your state:
How you left.
Some policies pay out on resignation only if you gave proper notice, and pay nothing if you were dismissed for cause.
Your contract.
A written employment agreement or a union agreement can give you more than state law requires. It cannot give you less where the law sets a floor.
Rules change. Check your current state guidance before you rely on any of this.
H2: When the money should reach you
Vacation pay normally arrives in your final paycheck rather than as a separate payment.
Each state sets its own deadline for that final cheque. Some require payment on your last day if you were dismissed. Others allow until the next scheduled payday. A few set a fixed number of days.
If the deadline passes and nothing arrives, or the payout is missing from an otherwise correct cheque, start with payroll. Most cases are an administrative miss, not a refusal.
If your employer refuses to pay
Work through it in order.
Get the policy in writing.
Ask HR for the section of the handbook that covers payout on termination. If they will not send it, that is worth noting.
Put your figure in writing.
Email your hours, your rate, and your total. A written record matters if this escalates.
Ask for the reason in writing.
If they are refusing, get them to say why. A policy they cannot point to is hard to defend.
Contact your state labor department.
Every state has a wage claim process, most are free, and you do not need a lawyer to start one.
Speak to an employment lawyer
if the sum is large or you were dismissed in circumstances you are disputing. Many offer a free first consultation.
Do not sign a severance or release agreement before you understand whether it waives a payout you were owed.
Tax on your vacation payout
Vacation pay is wages, so income tax and payroll tax apply the same way they do to any other pay.
Most employers withhold federal tax at the flat supplemental rate, and Social Security and Medicare come out on top. Link to /pto-payout-calculator/ here with the anchor PTO payout calculator, which covers withholding in more detail.
Frequently asked questions
How do I calculate vacation pay?
Multiply your unused vacation hours by the pay rate your employer must use. Eighty hours at $25 an hour is $2,000 before tax. Check whether shift differentials or bonuses raise that rate.
Is my employer required to pay out unused vacation?
There is no federal requirement. It depends on your state and your written policy. California, Colorado, Montana, and Nebraska treat accrued vacation as earned wages that must be paid. Most other states follow the employer’s policy.
What rate is vacation paid out at?
Usually your final base rate rather than the rate when the days were earned. Shift differentials and non discretionary bonuses often have to be included. Overtime premiums normally do not.
Do commissions count toward my vacation pay rate?
For commissioned staff, usually yes, averaged over a recent period. How that average is worked out varies, so check your policy.
Does a recent pay rise change my payout?
At most employers, yes. Payouts are normally calculated at your final rate, so a raise before you leave increases what you are owed.
Can my employer pay out vacation at less than full value?
Some do where state law allows it and the policy says so. In states that treat vacation as earned wages, they generally cannot.
What if I was fired rather than resigned?
The payout rules are often the same, but some policies withhold it for dismissal with cause or where notice was not given. Your state law may override that.
How long does my employer have to pay me?
Each state sets a deadline for final pay, ranging from your last day of work to the next scheduled payday. Vacation pay normally sits inside that final cheque.
Our other calculators
- PTO Accrual Calculator works out how much vacation you have earned so far.
- PTO Payout Calculator covers payouts from a combined PTO bank and the tax that comes off.
- PTO Calculator at the homepage, shows your current balance.
Disclaimer
This calculator gives an estimate for information only. It is not legal, tax, or HR advice, and it cannot tell you whether your employer owes you a payout. State rules change and your written policy matters.
