How it works
A PTO cash-out converts banked vacation hours into a final paycheck amount — hours times your hourly rate, taxed as supplemental wages. Whether the payout exists at all is decided by state law and company policy rather than federal rules: California, Colorado and roughly half the states treat accrued vacation as earned wages that must be paid at separation, while others permit use-it-or-lose-it forfeiture outright. The calculator prices three scenarios from one input set. Cash-out produces the headline figure — 68 banked hours at $28 an hour pays $1,904 gross, with 22–28% combined withholding leaving roughly $1,447 in hand. Forfeiture assigns the full $1,904 to the risk column, a number worth knowing two months before resigning rather than after. Mandatory-use policies change the strategy instead of the math: scheduling those same 68 hours during your notice period delivers identical pay while preserving health-insurance continuity and avoiding the lump-sum tax spike of a single fat check. Timing matters in every scenario because payouts stack onto final wages and can push withholding higher than your true bracket; like all supplemental withholding, over-collection returns at filing time. Employees planning an exit should snapshot their balance early, confirm the policy in writing, and let this valuation anchor the departure-date negotiation.
Formula
Gross = PTO hours × hourly rate | After-tax = gross × (1 − tax%) | Days = hours ÷ 8
Tips
- Screenshot your PTO balance at resignation — payroll errors spike during separations.
- In payout-required states, employers cannot deduct forfeited balances from other checks.
- Using days during notice preserves benefits continuity that a cash-out does not.
- A lump-sum payout can bump withholding above your real bracket — expect a refund.
- Check accrual caps; some employers stop accruing once ceilings are hit.
Frequently asked questions
- Does an employer have to pay out PTO when you quit?
- Depends entirely on the state. California, Colorado, Illinois and many others classify accrued vacation as deferred wages requiring payment at separation; several others allow written use-it-or-lose-it policies to erase the balance. Company policy more generous than state law generally binds the employer to its own terms.
- How is a PTO cash-out taxed?
- As supplemental wages — most employers withhold a flat 22% federally plus FICA and state, so 68 hours at $28 pays $1,904 gross and roughly $1,447 net. Because the money stacks onto your annual income, any withholding above your true marginal bracket returns when you file.
- Should I use my PTO before quitting or take the cash?
- Financially similar — both pay the same wage for the hours. Using days during your notice keeps health coverage running and spreads taxation across checks, while cash-out delivers liquidity immediately but in one heavily withheld lump sum. If the balance would otherwise be forfeited, either path beats losing it.
- Can an employer deny a PTO cash-out?
- Where state law requires payout, no — denial is a wage claim waiting to happen. Where forfeiture is legal, employers may refuse cash-out yet still bar usage during notice, effectively erasing the balance. That combination is exactly why the at-risk value deserves checking before you announce a departure date.
- How much is 68 hours of PTO worth?
- At a $28 hourly rate, $1,904 gross — about $1,447 after typical supplemental withholding — equivalent to 8.5 eight-hour days. Salaried workers convert salary ÷ 2,080 into the hourly figure first; a $70,000 salary values those same 68 hours near $2,308.