PTO payouts are taxed as regular income — federal income tax (22% supplemental rate or aggregate method), Social Security (6.2%), Medicare (1.45%), and state income tax. For a 40-hour ($25/hr) PTO payout in Texas: $1,000 gross → approximately $734 net after federal taxes.
PTO Payout Calculator 2026
See exactly how much you'll net from unused PTO after federal, state, and FICA taxes. Supplemental withholding (22%) or aggregate method. All 50 states.
Last updated: September 2026 — rates sourced from IRS Publication 15, SSA & state revenue departments
Enter Your Details2026 Rates
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How PTO payout taxes work
When your employer pays out unused PTO — whether at termination, a use-it-or-lose-it conversion, or a buyback program — the amount is treated as supplemental wages for tax purposes.
Supplemental rate method (most common): employer withholds 22% flat federal rate on the PTO payout, plus FICA and state taxes. This is simple but may over- or under-withhold depending on your actual marginal rate.
Aggregate method: employer combines PTO payout with regular wages for the pay period and withholds based on the total. Typically results in higher withholding but more accurate to your actual tax bracket.
To track your remaining PTO and when you'll earn future balance, use the PTO Calculator.
Net PTO PayoutAfter Tax
Enter your PTO hours and rate then click Calculate.
Net PTO Payout
$0.00
after all taxes
PTO Details
Gross PTO payout
$0.00
Unused PTO days
0.0 days
Taxes Withheld
Federal income tax
−$0.00
Social Security (6.2%)
−$0.00
Medicare (1.45%)
−$0.00
State income tax
−$0.00
Net payout
$0.00
Disclaimer: Results are estimates based on 2026 IRS and published government rates. Not a substitute for licensed payroll software or professional tax or financial advice.
FAQ
PTO Payout Calculator questions answered
PTO payout is taxed as ordinary income — the same as regular wages. Your employer may withhold using either the 22% flat supplemental rate (most common for supplemental payments) or the aggregate method (adding the payout to your regular wages for the period and withholding based on the total). You also pay Social Security (6.2%) and Medicare (1.45%) on the full payout amount.
Yes. Regardless of whether the payout is required by law (California, etc.) or voluntary by employer policy, PTO payout is fully taxable as wages. It will appear on your W-2 for the year it was paid. Federal income tax, FICA, and applicable state taxes all apply.
Yes — a large PTO payout late in the year can increase your effective tax rate and may mean you owe additional taxes at filing if the 22% supplemental withholding was less than your actual marginal rate. If your income was modest all year, you may actually be over-withheld on the supplement and receive a larger refund. Run the Tax Withholding Calculator with your full year income to estimate.
California requires all accrued, unused PTO to be paid out at termination as a matter of law — it's treated as earned wages. Montana similarly treats accrued vacation as wages. Massachusetts requires payout for "earned, vested" vacation. Illinois requires payout unless a written policy says otherwise. Many other states allow employers to have no-payout policies if disclosed in writing.