Estimates for personal planning — not tax, legal, or payroll advice. Every number above is gross pay unless a line says otherwise; the formula, its boundaries, and its test cases are published below.
How it works
gross = 64 h × $25.00 = $1,600.00
fed_flat = $1,600 × 22% = $352.00 // IRS Pub 15, optional flat method
preview = $1,600 − $352 = $1,248.00
How PTO payout is calculated
Payout is your unused hours times your current hourly rate. Salaried? The standard conversion applies: rate = salary ÷ 2,080 (that's the annual salary mode above — $62,400 a year is $30.00/hr, a published test case).
Is payout required when you leave?
No federal law requires PTO payout. Whether unused vacation must be paid at separation is a matter of state law and company policy, and states differ sharply. Check your handbook first, then your state labor office. This page computes the amount; it doesn't promise your state makes it mandatory.
How the payout is taxed
PTO payouts are supplemental wages. Paid separately from regular wages, employers may withhold federal income tax at the optional flat rate — 22% for amounts under $1M (IRS Pub 15). Social Security and Medicare still apply, and your state has its own rules — neither is modelled here, which is why the last line says preview.
Use-it-or-lose-it, rollover, and accrual caps
Three policies you'll meet, with very different consequences at separation. Use-it-or-lose-it zeroes unused time at year end — legal in many states, banned in others that treat accrued vacation as earned wages. Rollover carries a capped amount forward. An accrual cap stops you earning more once you hit a ceiling, which quietly reduces total compensation for anyone who doesn't take time off. Your handbook names which one applies; the state you work in determines whether it's enforceable.
Payout at separation versus a mid-year cash-out
A payout when you leave and a voluntary cash-out while employed are taxed the same way — both are supplemental wages — but they differ in one respect worth knowing: a mid-year cash-out is usually optional and often capped by policy, while payout at separation, where required, is a wage claim you can pursue through your state labor office if it's withheld.
From the public test suite
assert ptoPayout(64h, $25).fedFlat22 == 352.00 ✓
assert ptoPayout(40h, $62,400/yr).hourly == 30.00 ✓
// 36 cases · 96 assertions · runs on every deploy — see all
Sources
Built and maintained by Ethan Chen, independent developer. No credential is claimed that we don't have — what this page offers instead is a published formula and a public test suite.