PTO Payout Laws by State 2026: All 50 States + D.C.
Every US state plus Washington, D.C. in one table: whether accrued vacation must be paid out upon termination, whether use-it-or-lose-it forfeiture is prohibited, and the key nuance per state.
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Which states require vacation payout upon termination?
10 states require it outright, because they treat accrued vacation as earned wages that cannot be forfeited: California, Colorado, Illinois, Indiana, Louisiana, Maine, Massachusetts, Montana, Nebraska and North Dakota. In those states the payout is owed whether you quit or are fired, and regardless of what the company policy says. Another 5 states require payout conditionally, typically unless the written policy or contract explicitly excludes it. In every other state the written company policy decides: what it promises is enforceable, what it excludes is forfeited. The table summarizes the rule per state; for the math and a net estimate, the PTO payout calculator has a dedicated page per state.
| State | Payout rule | Use-it-or-lose-it prohibited | Note |
|---|---|---|---|
| Alabama | Depends on employer policy | No | No state statute requiring payout; payout depends on the employer's written policy. |
| Alaska | Depends on employer policy | No | No state income tax. Payout depends on employer policy. |
| Arizona | Depends on employer policy | No | Payout depends on employer policy. State uses the regular withholding method (no flat supplemental rate). |
| Arkansas | Depends on employer policy | No | Payout depends on employer policy. |
| California | Payout required | Yes | Accrued vacation is earned wages: payout is required and use-it-or-lose-it is prohibited. CA supplemental rate is 6.6% (10.23% for bonuses/stock options). |
| Colorado | Payout required | Yes | Accrued vacation must be paid out; forfeiture is prohibited. Regular withholding method. |
| Connecticut | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| Delaware | Depends on employer policy | No | Payout depends on employer policy. No flat supplemental rate (state suggests ~5% for some payments). |
| District of Columbia | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| Florida | Depends on employer policy | No | No state income tax. Payout depends on employer policy. |
| Georgia | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| Hawaii | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| Idaho | Depends on employer policy | No | Payout depends on employer policy. Supplemental withholding varies (no single flat rate). |
| Illinois | Payout required | No | Earned vacation must be paid out under the IL Wage Payment and Collection Act. Flat income tax; regular method for supplemental. |
| Indiana | Payout required | No | Accrued vacation generally treated as earned wages and paid out, subject to a clear written policy. Regular method. |
| Iowa | Depends on employer policy | No | Payout depends on employer policy. |
| Kansas | Depends on employer policy | No | Payout depends on employer policy. |
| Kentucky | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| Louisiana | Payout required | No | Accrued vacation is considered wages and must be paid out. Regular method. |
| Maine | Payout required | No | Larger employers must pay out accrued vacation at separation (recent law). Confirm employer-size thresholds. |
| Maryland | Conditionally required | No | Must pay out unless the employer's written policy clearly states forfeiture and the employee had notice. Regular method. |
| Massachusetts | Payout required | No | Accrued vacation must be paid out at separation. Regular method. |
| Michigan | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| Minnesota | Depends on employer policy | No | Payout depends on employer policy/agreement. |
| Mississippi | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| Missouri | Depends on employer policy | No | Payout depends on employer policy. |
| Montana | Payout required | Yes | Accrued vacation must be paid out; use-it-or-lose-it is prohibited. |
| Nebraska | Payout required | Yes | Earned vacation must be paid out; forfeiture prohibited. |
| Nevada | Depends on employer policy | No | No state income tax. Payout depends on employer policy. |
| New Hampshire | Depends on employer policy | No | No state income tax on wages. Payout depends on employer policy. |
| New Jersey | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| New Mexico | Depends on employer policy | No | Payout depends on employer policy. |
| New York | Conditionally required | No | Must pay out accrued vacation unless a written forfeiture policy was communicated to employees. |
| North Carolina | Conditionally required | No | Must pay out unless a written policy clearly states forfeiture and was communicated in advance. |
| North Dakota | Payout required | No | Accrued vacation generally must be paid out (narrow employer exceptions apply). |
| Ohio | Depends on employer policy | No | Payout depends on employer policy. |
| Oklahoma | Depends on employer policy | No | Payout depends on employer policy. |
| Oregon | Depends on employer policy | No | Payout depends on employer policy/agreement. |
| Pennsylvania | Depends on employer policy | No | Payout depends on employer policy. Flat state income tax; regular method for supplemental. |
| Rhode Island | Conditionally required | No | Vacation pay may be due as wages after a qualifying period of employment. |
| South Carolina | Depends on employer policy | No | Payout depends on employer policy. No published flat supplemental rate. |
| South Dakota | Depends on employer policy | No | No state income tax. Payout depends on employer policy. |
| Tennessee | Depends on employer policy | No | No state income tax on wages. Payout depends on employer policy. |
| Texas | Depends on employer policy | No | No state income tax. Payout depends on employer policy. |
| Utah | Depends on employer policy | No | Payout depends on employer policy. Regular withholding method. |
| Vermont | Depends on employer policy | No | Payout depends on employer policy. Supplemental withholding is 30% of federal withholding (not modeled here). |
| Virginia | Depends on employer policy | No | Payout depends on employer policy. Optional flat 5.75% supplemental rate. |
| Washington | Depends on employer policy | No | No state income tax on wages. Payout depends on employer policy. |
| West Virginia | Conditionally required | No | Fringe benefits including vacation may be payable as wages under the written policy/agreement. |
| Wisconsin | Depends on employer policy | No | Payout depends on employer policy. Supplemental rate varies by salary band (not modeled here). |
| Wyoming | Depends on employer policy | No | No state income tax. Payout depends on employer policy. |
General information only, not legal or tax advice. State rules are summarized and change over time; confirm with employment counsel and your state labor agency before relying on them.
Methodology and dataset
The dataset covers all 50 US states plus Washington, D.C., so 51 rows, one per jurisdiction. There is no sampling and no estimation: each row is a classification of the law in force, not a measured value.
The payout rule is classified in three levels. "Required" means the state treats accrued vacation as earned wages that cannot be forfeited. "Conditionally required" means the obligation applies unless the written policy or contract explicitly excludes it. "Depends on employer policy" means the state imposes no obligation of its own and only the written promise is enforceable.
Last checked in full against sources on 2026-10-03. Primary sources are the state labor and wage agencies, the statutes themselves, and the NCSL and SHRM state-law publications. The flat supplemental withholding column comes from each state revenue agency's own guidance and is empty where the state publishes no flat rate.
- Scope is vacation and PTO only, not accrued sick leave, which most states treat under separate rules.
- City and county ordinances are out of scope. Where they are stricter, the standard more favorable to the employee applies.
- The note column carries the single most important nuance per state and is not a substitute for legal advice.
51 rows, UTF-8 CSV, verified 2026-10-03. Free to reuse with attribution to Time-Out Zone.
Related
Frequently asked questions
- What does use-it-or-lose-it mean?
- A policy under which unused vacation is forfeited at year end. Some states (California, for example) prohibit forfeiture because accrued vacation counts as earned wages there.
- Do payout laws cover sick leave too?
- Usually not: payout rules generally apply to vacation/PTO. Accrued sick leave does not have to be paid out in most states unless the employer's policy says otherwise.
- What states require PTO payout?
- California, Colorado, Illinois, Indiana, Louisiana, Maine, Massachusetts, Montana, Nebraska and North Dakota. Those 10 treat accrued vacation as earned wages, so an employer cannot keep the balance when employment ends. A further 5 states require it when the employer's written policy or contract does not exclude it.
- Does an employer have to pay out vacation if you are fired?
- In the states that treat accrued vacation as earned wages, yes: the reason for separation does not matter, and the payout is owed on a firing just as it is on a resignation. Elsewhere it depends on the written policy, and some policies pay out on resignation but not on a termination for cause. That clause is enforceable in most states, so read it before you assume.
- How current is this table?
- As of the last-updated date shown, as general information. Laws change; confirm with the state labor agency or employment counsel before acting on it.
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