PTO Payout Laws by State: All 50 States + D.C.
Every US state plus Washington, D.C. in one table: whether accrued vacation must be paid out at separation, whether use-it-or-lose-it forfeiture is prohibited, and the key nuance per state.
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Which US states require PTO payout at separation?
10 states treat accrued vacation as earned wages that must be paid out when employment ends, regardless of company policy (California and Colorado among them). 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.
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.
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.