Estimate the cash value of unused PTO hours including tax withholding. Calculate your net payout when cashing out paid time off at separation or year-end.
When you leave a job or your employer offers a PTO buy-back program, your unused paid time off has a real dollar value. This calculator converts your unused PTO hours into a gross cash amount and then estimates the net payout after federal and state tax withholding.
The gross payout is straightforward: multiply your unused hours by your hourly rate. If you're salaried, divide your annual salary by 2,080 (standard work hours per year) to find the hourly equivalent. Taxes on PTO payouts are typically withheld at supplemental income rates, which may differ from your regular paycheck withholding.
Use this tool to plan your finances around a job change, evaluate whether to use remaining PTO or cash it out, or estimate the balance-sheet liability for your HR department. Whether you are a beginner or experienced professional, this free online tool provides instant, reliable results without manual computation. By automating the calculation, you save time and reduce the risk of costly errors in your planning and decision-making process.
PTO cash-outs are taxed as supplemental income, often at a flat 22% federal rate. Without calculating the net amount, employees are frequently surprised by how much tax is withheld. This tool sets realistic expectations and helps you decide between taking time off or cashing out. Having a precise figure at your fingertips empowers better planning and more confident decisions.
Gross Payout = Unused Hours × Hourly Rate Federal Tax = Gross Payout × Federal Rate State Tax = Gross Payout × State Rate FICA = Gross Payout × 7.65% Net Payout = Gross − Federal Tax − State Tax − FICA
Result: $1,831.20 net payout
80 hours × $35 = $2,800 gross. Federal tax: $2,800 × 22% = $616. State tax: $2,800 × 5% = $140. FICA: $2,800 × 7.65% = $214.20. Net payout: $2,800 − $616 − $140 − $214.20 = $1,829.80.
Cashing out PTO makes sense when you won't realistically use the hours, when you need the money for a major expense, or when you're leaving the company. However, remember that taking time off provides health and productivity benefits that money can't fully replace.
Large PTO payouts — especially at termination — can result in significant tax withholding that feels disproportionate. The flat 22% supplemental rate is designed to approximate most employees' effective rate, but your actual tax liability is determined when you file your return. If too much was withheld, you'll get a refund.
For HR teams, every hour of unused PTO represents a financial liability on the balance sheet. Encouraging employees to use PTO, offering buy-back programs, or implementing use-it-or-lose-it policies (where legal) helps manage this accruing cost.
Yes. PTO payouts are treated as supplemental wages and subject to federal income tax, state income tax (where applicable), Social Security, and Medicare. The IRS allows employers to withhold at a flat 22% federal rate for supplemental pay.
No. States like California, Colorado, and Massachusetts require payout of accrued unused PTO. Others allow employers to set their own policies. Check your state's labor department for specific rules.
Typically, your annual salary is divided by 2,080 hours (52 weeks × 40 hours) to determine the hourly rate. Some employers use a different divisor if the standard work week is not 40 hours.
This depends on your employer's policy. Some companies offer annual buy-back programs where you can sell unused days. Others only pay out at termination. Many do not offer cash-out at all.
PTO payouts are included in your total wages on your W-2 (Box 1). They are part of your gross income for the year and subject to all applicable taxes. The withholding shows in the tax boxes as usual.
FICA (6.2% Social Security + 1.45% Medicare) applies unless you've already hit the Social Security wage base for the year ($168,600 for 2024). Above that threshold only the 1.45% Medicare portion applies.