PTO Payout Laws by State (2026): Which States Require Vacation Payout
By Archie Chang · 10 min read · Updated 2026-10-08
Whether you get paid for unused vacation when you quit or are let go depends almost entirely on your state and your employer's written policy. Federal law does not require it. Below is a state-by-state summary of PTO payout laws for all 50 states and Washington, DC, each linked to the statute, regulation or labor department page it comes from. To put a dollar figure on your balance and see the tax withheld, use the PTO payout calculator.
Which states require vacation payout upon termination?
10 states treat earned, unused vacation as wages that must be paid at separation: California, Colorado, Illinois, Louisiana, Maine, Massachusetts, Montana, Nebraska, North Dakota and Rhode Island. Most of them still let the employer decide whether to offer vacation and how it is earned; the rule is that vacation already earned cannot be taken away when you leave. Conditions vary: Maine covers employers with more than 10 employees and vacation accrued from January 1, 2023; Rhode Island applies after one year of service; Nebraska covers vacation but not other paid leave unless agreed.
States where your employer's policy decides
In 28 jurisdictions, including New York, Texas, Pennsylvania and Michigan, the state enforces vacation pay as wages only when the employer's policy, contract or established practice promises it. In Maryland, Wisconsin and Wyoming, earned vacation is owed unless a written policy says otherwise: Maryland requires payout unless a written policy limiting it was disclosed at hiring, Wyoming unless the employee acknowledged a written forfeiture policy, and Wisconsin when a written vacation policy has no written forfeiture rule. Read your handbook first, and keep a copy.
States with no vacation payout law
Alabama, Florida, Georgia, Mississippi, Missouri, New Mexico, Ohio, South Dakota, Virginia and Washington have no state rule on vacation payout, and some of their labor agencies say they do not take vacation-pay claims. Any right to payout comes from your employer's policy or contract and is enforced through a private claim, such as small claims court.
PTO payout laws by state: full table
Checked October 2026 against official sources. Summaries are written for employees and are not legal advice; confirm details with your state labor department.
| State | Payout rule | What it means |
|---|---|---|
| Alabama | No state law; employer policy decides | Alabama has no state wage-and-hour law covering vacation pay. Whether unused vacation is paid when you leave depends on your employer's policy or contract; federal law does not require payout. No state statute (FLSA only) |
| Alaska | Depends on your employer's policy | Alaska does not require employers to offer vacation pay. If your employer promised it by policy, contract or promise, the state labor department enforces that promise. Final wages are due within 3 working days if you are fired. AS 23.05.140(b) |
| Arizona | Depends on your employer's policy | Arizona does not require employers to provide vacation pay. If your employer's policy or practice promises it, the Industrial Commission accepts unpaid-vacation wage claims, so ask for the written policy. Final pay is due within 7 working days of a firing. A.R.S. §§ 23-350, 23-353 |
| Arkansas | Depends on your employer's policy | Arkansas has no law requiring vacation payout. The state labor department will consider a vacation-pay wage claim only if you can show a written company policy promising that payment. No state vacation statute; wage claim process (Ark. Code Ann. § 11-4-401 et seq.) |
| California | Payout of earned vacation required | California requires payout of all earned, vested vacation at the final rate when employment ends. Employers cannot make you forfeit vested vacation, and use-it-or-lose-it policies are not allowed, though reasonable accrual caps are. Cal. Lab. Code § 227.3 |
| Colorado | Payout of earned vacation required | Colorado requires employers to pay out all earned, unused vacation when you separate, whether you quit or are fired. Policies that forfeit earned vacation are void, though accrual caps are allowed. C.R.S. § 8-4-101(14)(a)(III); 7 CCR 1103-7 Rule 2.17; Nieto v. Clark's Market (Colo. 2021) |
| Connecticut | Depends on your employer's policy | Connecticut requires payout of accrued vacation only if your employer's policy or collective bargaining agreement provides for it. If it does, you must be paid at no less than your earned average rate. Conn. Gen. Stat. § 31-76k |
| Delaware | Depends on your employer's policy | Delaware has no law requiring vacation payout. If your employer agreed to pay vacation as a benefit, state law requires it to be paid within 30 days of when it comes due, and the Department of Labor can enforce it. 19 Del. C. § 1109 |
| District of Columbia | Depends on your employer's policy | DC does not require employers to give paid vacation. If your employer has a vacation policy set at hiring, the Office of Wage-Hour can help enforce it. Fired workers must be paid by the next working day. D.C. Code §§ 32-1301, 32-1303 |
| Florida | No state law; employer policy decides | Florida has no state law requiring vacation pay or payout of unused vacation. What you get when you leave depends on your employer's policy or contract. No state statute (Fla. Stat. ch. 448 contains no vacation payout rule) |
| Georgia | No state law; employer policy decides | Georgia has no law requiring employers to provide vacation or to pay out unused vacation when you leave. It follows your employer's policy or contract. No state statute |
| Hawaii | Depends on your employer's policy | Hawaii does not require paid vacation, and the employer's written policy decides how vacation is earned and used. Policies must be available to employees in writing. Fired employees must be paid wages by the next working day. HRS §§ 388-3, 388-7(3) |
| Idaho | Depends on your employer's policy | Idaho law does not require vacation pay. If your employer's policy or contract provides for it, that policy must comply with state wage-payment law. Final wages are due by the next payday or within 10 days, whichever is earlier. Idaho Code §§ 45-601, 45-606 |
| Illinois | Payout of earned vacation required | Illinois requires employers that provide paid vacation to pay out all earned, unused vacation in your final paycheck, and policies cannot forfeit earned vacation at separation. Use-it-or-lose-it rules are allowed only with notice and a reasonable chance to take the time. 820 ILCS 115/5; 56 Ill. Adm. Code 300.520 |
| Indiana | Depends on your employer's policy | Indiana does not require vacation payout by statute. The Department of Labor says you may be owed a pro rata share, but any conditions in your company's policy or employment contract must be met first. Ind. Code § 22-2-5-1 (final pay); no vacation payout statute |
| Iowa | Depends on your employer's policy | Iowa treats vacation as wages only when it is due under an agreement or employer policy. If your employer's policy provides for vacation pay, it must be paid as wages at separation. No policy, no state right to payout. Iowa Code §§ 91A.2(7)(b), 91A.4 |
| Kansas | Depends on your employer's policy | Kansas requires unused vacation to be paid when you leave only if your employer has a policy or practice of paying it. Employers may adopt use-it-or-lose-it policies and may delay accrual until an anniversary date. K.S.A. 44-319; K.S.A. 44-313 et seq. |
| Kentucky | Depends on your employer's policy | Kentucky counts vested vacation pay as wages, and your employer's policy decides what vests. Final wages are due by the next normal pay period or 14 days after you leave, whichever is later. KRS 337.010(1)(c); KRS 337.055 |
| Louisiana | Payout of earned vacation required | Louisiana requires payout of vacation you have earned and not taken, if your employer's policy makes you eligible. Employers cannot forfeit vacation pay actually earned. Pay is due by the next regular payday or within 15 days of discharge or resignation. La. R.S. 23:631(D) |
| Maine | Payout of earned vacation required | Maine requires employers with more than 10 employees to pay out unused paid vacation accrued on or after January 1, 2023 when employment ends, by the next established payday. Small employers and public employers are exempt. 26 M.R.S. § 626 |
| Maryland | Owed unless a written policy limits it | Maryland requires payout of accrued leave at termination unless your employer has a written policy limiting it and gave you notice of it at hiring. Without that written policy and notice, you are entitled to your unused earned vacation. Md. Code, Lab. & Empl. § 3-505 |
| Massachusetts | Payout of earned vacation required | Massachusetts treats earned vacation pay as wages, so you must be paid all earned, unused vacation when you leave, and employers cannot forfeit it. Fired employees must be paid on the day of discharge. M.G.L. c. 149, § 148; AG Advisory 99/1 |
| Michigan | Depends on your employer's policy | Michigan does not require vacation payout. Your employer must pay unused vacation only if its written policy or contract says so. If it does, pay is due on the regular payday for the period in which you left. MCL 408.471(e), 408.473-408.478 (Act 390 of 1978) |
| Minnesota | Depends on your employer's policy | Minnesota lets company policy decide whether unused vacation is paid at separation. If your employer's policy or agreement promises it, benefits are due within 30 days of when they become payable, enforceable in conciliation court. Minn. Stat. § 181.74 |
| Mississippi | No state law; employer policy decides | Mississippi has no state law requiring vacation pay or payout of unused vacation. What you get when you leave depends on your employer's policy or contract. No state statute |
| Missouri | No state law; employer policy decides | Missouri does not require employers to provide vacation pay or pay out unused vacation unless a contract establishes it. If your employer does not follow its own policy, your option is a private claim such as small claims court. No state statute |
| Montana | Payout of earned vacation required | Montana says once vacation is earned under your employer's policy it is wages and must be paid at separation like regular wages. Use-it-or-lose-it policies are not permitted, though accrual caps are. Mont. Code Ann. § 39-3-205; Montana AG Op. 23 Op. Att'y Gen. No. 56 |
| Nebraska | Payout of earned vacation required | Earned but unused vacation counts as wages and must be paid at separation. Other paid leave is not owed unless agreed. The vacation must actually be earned under the employer's agreed conditions. Neb. Rev. Stat. § 48-1229(6) |
| Nevada | Depends on your employer's policy | Nevada does not require payout of unused paid leave when you leave. Employers may, but need not, pay it. Whether you get paid depends on the employer's policy or agreement. NRS 608.0197 (employer may, but is not required to, compensate unused paid leave at separation) |
| New Hampshire | Depends on your employer's policy | Vacation pay counts as wages, payable when due, if it is a matter of employment practice or policy. So payout at separation follows the employer's written or customary policy. RSA 275:43, V |
| New Jersey | Depends on your employer's policy | New Jersey does not require vacation pay. If an employer provides it, the employer must follow its established policy or agreement, and the state can take a wage claim for unpaid vacation under that policy. N.J.S.A. 34:11-4.1 et seq. (Wage Payment Law); NJ DOL FAQ |
| New Mexico | No state law; employer policy decides | New Mexico has no statute requiring vacation or similar pay. Payout at separation depends on the employer's policy or contract. No state statute (NM DWS Labor Relations FAQ) |
| New York | Depends on your employer's policy | New York requires employers to provide vacation benefits the way their policy or agreement promises, and the Labor Department enforces unpaid vacation as a wage supplement. Payout at separation depends on that policy, which must be communicated in writing. N.Y. Labor Law § 198-c; § 195(5) |
| North Carolina | Depends on your employer's policy | North Carolina does not require vacation pay, but if offered, employers must pay out vacation time or pay under company policy. Forfeiture rules must be communicated to employees in advance, or they cannot be enforced. N.C.G.S. §§ 95-25.12, 95-25.7, 95-25.13 |
| North Dakota | Payout of earned vacation required | Earned paid time off is wages at separation. Employers must pay available PTO at the regular rate, and no contract or policy may forfeit earned PTO on separation. Use-it-or-lose-it deadlines are allowed with notice and reasonable chance to use. N.D. Admin. Code § 46-02-07-02(12) |
| Ohio | No state law; employer policy decides | Ohio has no statute requiring payout of unused vacation. Any right to a payout comes from your employer's written policy or your employment contract. Ohio Rev. Code § 4113.15 |
| Oklahoma | Depends on your employer's policy | Oklahoma treats accrued vacation as wages at termination only if a written contract or policy, or an established practice of paying it out, provides for cash in lieu of time off, and you meet its conditions. 40 O.S. § 165.1(4); OAC 380:30-1-5 |
| Oregon | Depends on your employer's policy | Oregon does not require employers to offer vacation pay, but they must honor any established policy or agreement. If your policy pays out accrued vacation and you qualify, it is owed with your final pay. BOLI guidance (ORS ch. 652 final wages) |
| Pennsylvania | Depends on your employer's policy | Pennsylvania has no law requiring vacation pay. An employer must pay unused vacation at separation only if its policy or a contract promises it, and then must follow its own rules. Wage Payment and Collection Law, 43 P.S. § 260.1 et seq. |
| Rhode Island | Payout of earned vacation required | After one year of service, accrued vacation pay (earned under a policy, agreement or practice) becomes wages and is due in full or prorated on the next regular payday after separation. Immediate if the business closes or moves. R.I. Gen. Laws § 28-14-4(b), (c) |
| South Carolina | Depends on your employer's policy | Vacation pay due under an employer's policy or employment contract counts as wages, so it must be paid at separation. South Carolina does not itself require employers to offer vacation. S.C. Code Ann. §§ 41-10-10(2), 41-10-50 |
| South Dakota | No state law; employer policy decides | South Dakota has no law requiring paid leave such as vacation; it is a matter of employer policy. SDCL ch. 60-11 (no paid leave mandate); DLR FAQ |
| Tennessee | Depends on your employer's policy | Tennessee law does not require unused vacation in final pay unless the employer's policy or labor agreement specifically requires it. Employers may set the terms. T.C.A. § 50-2-103(a)(3) |
| Texas | Depends on your employer's policy | Under the Texas Payday Law, vacation pay is wages only if owed under a written agreement or written policy. Without such a written policy, unused vacation need not be paid at separation. Tex. Lab. Code § 61.001(7)(B) |
| Utah | Depends on your employer's policy | Utah does not require employers to provide vacation pay. If an employer has a policy or practice of providing it, it must follow that policy. Payout at separation depends on the policy or agreement. Utah Code Title 34 Ch. 28 (Payment of Wages Act); Utah Labor Commission FAQ |
| Vermont | Depends on your employer's policy | Vermont law does not require payout of accrued vacation at separation. Whether you are paid is set by the employer's policy. A bill to require payout has been proposed but was not law in the sources checked. 21 V.S.A. §§ 341-342 (no vacation payout mandate) |
| Virginia | No state law; employer policy decides | Virginia law does not treat vacation or PTO as wages, and the state labor department does not enforce them. Any right to payout comes from your employer's policy or contract, enforced through a civil suit. Va. Code § 40.1-29; DOLI Payment of Wage guidance |
| Washington | No state law; employer policy decides | Washington does not require employers to pay out vacation at separation. Vacation is a voluntary benefit employers can choose to pay. Paid sick leave has separate rules. L&I wage guidance (no statute requires vacation payout) |
| West Virginia | Depends on your employer's policy | Accrued vacation counts as wages that must be paid at separation, but payment follows the terms of the employer's agreement or policy, including any conditions or later pay date. W. Va. Code §§ 21-5-1(c), (l); 21-5-4(b) |
| Wisconsin | Owed unless a written policy limits it | Wisconsin does not require vacation pay. If the employer has a written vacation policy with no written forfeiture rule, earned unused vacation must be paid. Employers may set conditions, including notice requirements. Wis. Stat. § 109.01(3); DWD guidance |
| Wyoming | Owed unless a written policy limits it | In Wyoming, accrued vacation is wages at termination unless the employer's written policy says it is forfeited on termination and the employee acknowledged that policy in writing. Wyo. Stat. § 27-4-501(a)(iii) |
What federal law says
The U.S. Department of Labor states that the Fair Labor Standards Act does not require payment for time not worked, such as vacations, sick leave or holidays. These benefits are a matter of agreement between employer and employee. That is why the answer changes at the state line, and why the written policy matters even in states with payout laws.
Use-it-or-lose-it policies and accrual caps
A use-it-or-lose-it policy wipes out unused vacation at a deadline. Official sources describe these as not permitted in California, Colorado, Louisiana and Montana, because earned vacation is wages that cannot be forfeited; employers there can instead cap accrual so you stop earning more once you reach a limit. Illinois, North Carolina, North Dakota and Massachusetts guidance allows forfeiture rules only with advance notice and a reasonable chance to use the time. Kansas allows them. In most other states no official source takes a position, so the written policy controls.
How a vacation payout is taxed
A payout is wages. IRS Publication 15 treats a lump-sum payment for unused vacation, made in addition to regular wages, as supplemental wages, so your employer may withhold federal income tax at a flat 22% plus Social Security and Medicare. Some states also have lower withholding on these payouts than on bonuses; California, for example, uses 6.6% instead of 10.23%. The PTO payout calculator estimates both the check and the added annual tax, and the severance pay calculator does the same for a severance offer.
Frequently asked questions
Which states require vacation payout upon termination?
In our review of official state sources, 10 states treat earned, unused vacation as wages that must be paid when employment ends: California, Colorado, Illinois, Louisiana, Maine, Massachusetts, Montana, Nebraska, North Dakota and Rhode Island. Several attach conditions, such as Maine applying only to employers with more than 10 employees and Rhode Island only after one year of service.
Does federal law require PTO payout?
No. The U.S. Department of Labor says the Fair Labor Standards Act does not require payment for time not worked, such as vacations; these benefits are a matter of agreement between employer and employee.
What if my employer's policy says nothing about payout?
It depends on the state. In some states a silent policy leaves you entitled to earned vacation; Maryland, for example, requires payout unless a written policy limiting it was disclosed at hiring, and Wisconsin requires it when a written vacation policy has no written forfeiture rule. In others, there is no state right without a promise in the policy.
Are use-it-or-lose-it policies legal?
Official sources describe them as not permitted in California, Colorado, Louisiana and Montana, where earned vacation cannot be forfeited, though reasonable accrual caps are allowed. Some states allow them with notice and a reasonable chance to use the time, and many states have no official statement.
Is a PTO payout taxed?
Yes. A payout of unused vacation is wages subject to income tax, Social Security and Medicare. Paid in addition to regular wages, it is supplemental wages, so federal income tax may be withheld at a flat 22%.
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