US Vacation Pay & Final Payout Calculator (2026)
Whether you are planning paid time off or leaving a job, calculating your exact vacation pay requires understanding both state wage payment statutes and IRS supplemental tax withholding regulations. In states like California, Colorado, and Illinois, accrued vacation is legally classified as earned wages that can never be forfeited and must be paid out in full upon job separation. This calculator computes your gross vacation pay, evaluates state-specific separation payout mandates, and estimates your net take-home vacation check after IRS supplemental withholding (22% flat) and FICA taxes.
Vacation Pay Parameters (2026)
Separation Payout Laws · IRS Supplemental Tax (22%) · Net Take-Home
Calculation Breakdown
Equivalent to 8.0 workdays (1.60 workweeks)
IRS Pub 15-T supplemental wage flat withholding
Social Security (6.2%) + Medicare (1.45%)
Estimated state withholding in California
Estimated net payout deposited after standard statutory deductions
•California: All vested vacation is earned wages. Use-it-or-lose-it policies are illegal. 100% of accrued, unused vacation must be paid at the final rate of pay upon separation.
CA Labor Code § 227.3
All vested vacation is earned wages. Use-it-or-lose-it policies are illegal. 100% of accrued, unused vacation must be paid at the final rate of pay upon separation.
How Your US Vacation Pay Was Calculated
Statutory standards under IRS Publication 15-T and state wage payment collection acts.
Calculate Gross Accrued Vacation Compensation
$2,432.00Vacation compensation is calculated on your current straight-time regular rate of pay at the time the vacation is taken or cashed out.
Evaluate State Separation Payout Protections
MANDATORY PAYOUTUnder CA Labor Code § 227.3, earned vacation is legally classified as earned wages. Your employer CANNOT enforce a 'use-it-or-lose-it' policy or withhold your vacation check upon separation.
Supplemental Tax Withholding Computation
-$842.69When vacation pay is paid out as a lump sum upon separation, the IRS treats it as supplemental wages, subjecting it to a mandatory flat 22% federal withholding plus mandatory FICA.
Estimated Net Take-Home Vacation Payout
$1,589.31Estimated net funds received in your final paycheck or direct deposit for 8.0 workdays of accrued vacation.
How this calculator works
How it works
- 01Compensation Base: Multiplies your accumulated unused vacation hours by your regular straight-time hourly wage rate.
- 02Workday & Workweek Equivalencies: Translates total vacation hours into standard 8-hour paid days and 40-hour paid weeks.
- 03Separation Statutory Audit: Analyzes your state's legal protections—distinguishing between mandatory payout states (CA, CO, IL, MT) and employer-policy states (TX, FL, NY).
- 04IRS Supplemental Wage Withholding: Under IRS Publication 15-T, lump-sum vacation payouts are treated as supplemental wages subject to a flat 22% federal withholding.
- 05Net Take-Home Projection: Subtracts federal supplemental withholding (22%), FICA payroll taxes (7.65%), and state taxes to determine your net final check.
Tax rules that apply
- •California Labor Code § 227.3: Earned vacation is a form of deferred wages. Any contract or company policy providing for forfeiture of vested vacation upon termination is strictly void.
- •California Waiting Time Penalties: Under CA Labor Code § 203, if an employer willfully fails to pay all accrued vacation on the final paycheck, the employee's wages continue as a penalty for up to 30 full calendar days.
- •Colorado CDLE Wage Protection Act: Confirmed by the Colorado Supreme Court in Nieto v. Clark’s Market, all earned vacation pay must be paid out upon separation, regardless of contrary handbook policies.
- •New York Labor Law § 195(5): Employers must pay accrued vacation unless the employer has an explicit, written policy notifying employees in advance that unused vacation is forfeited.
- •Federal FLSA Absence: The federal Fair Labor Standards Act does not mandate vacation pay or payouts upon termination; state statutory law and written contracts govern.
Current Tax Rates
| Tax / Deduction | Rate | Notes |
|---|---|---|
| IRS Supplemental Withholding Rate | 22.00% | Flat federal withholding on lump-sum vacation payouts |
| FICA Payroll Tax Rate | 7.65% | 6.2% Social Security + 1.45% Medicare |
| California Vacation Payout | 100% Mandatory | Vested wages under CA Labor Code § 227.3 |
| Colorado Vacation Payout | 100% Mandatory | Anti-forfeiture rule under C.R.S. § 8-4-101 |
| Illinois Vacation Payout | 100% Mandatory | Monetary equivalent under 820 ILCS 115/5 |
| Standard Workday Conversion | 8.0 Hours | Standard basis for one day of vacation pay |
What this calculator assumes
- Assumes regular hourly compensation rate remains constant during the accrual and payout period.
- Tax withholding assumes the lump sum is processed as supplemental wages under IRS Publication 15-T flat percentage method.
- State tax withholdings are estimated based on statutory supplemental schedules where applicable.
- Independent contractors (1099) are not covered by statutory wage payment collection acts.
Where our numbers come from
These calculators are based on official government tax rates and rules. We link directly to the source so you can verify everything yourself.
U.S. DOL — Paid Leave & Vacation Benefits (FLSA & FMLA)
U.S. Department of Labor
California Labor Code § 510 — Overtime Compensation
California Legislature — California Labor Code
IRS Publication 15-T (Federal Withholding Tables)
Internal Revenue Service — U.S. Dept. of Treasury
New York Labor Law Article 19 — Minimum Wage & Overtime
New York State Department of Labor
Frequently Asked Questions
Does my employer have to pay out unused vacation when I quit or get fired?
It depends entirely on the state where you work. In states like California, Colorado, Illinois, and Montana, state law classifies accrued vacation as earned wages, making 100% cash payout mandatory upon job separation regardless of whether you quit, were laid off, or were fired for cause. In states like Texas, Florida, and Georgia, no statute requires payout—your company's written handbook policy dictates whether unused vacation is paid or forfeited.
Why is vacation payout taxed at a higher rate on my final check?
Vacation payouts are not actually taxed at a higher overall rate, but they are subject to higher upfront withholding. The IRS classifies vacation cash-outs as 'supplemental wages.' Employers using the flat withholding method must withhold a flat 22% for federal income tax (plus 7.65% FICA and state tax), regardless of your normal W-4 withholding bracket. When you file your annual tax return, any excess tax withheld is refunded.
What is California Labor Code Section 227.3 and how does it protect vacation pay?
California Labor Code § 227.3 establishes that whenever an employment contract or employer policy provides for paid vacation, all earned vacation becomes vested as wages as it accrues. The law expressly states that 'an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination.' Furthermore, the employer must pay all vested vacation at the employee's final rate of pay immediately upon termination.
Can an employer enforce a use-it-or-lose-it vacation policy in New York?
In New York, an employer CAN enforce a use-it-or-lose-it policy or refuse vacation payout upon separation ONLY IF the employer has an established written policy informing employees of that rule in advance (NY Labor Law § 195(5)). If the employer does not have an explicit written policy stating that accrued vacation is forfeited, New York courts require the employer to pay out all accrued vacation.
How is vacation pay calculated for salaried employees?
For salaried exempt employees, your hourly vacation rate is calculated by dividing your annual salary by 2,080 (the number of standard working hours in a 52-week year at 40 hours/week). For example, on a $78,000 annual salary: $78,000 ÷ 2,080 = $37.50/hour. If you have 80 hours (10 days) of accrued vacation, your gross payout is 80 × $37.50 = $3,000.00.
What are 'waiting time penalties' for late final vacation pay in California?
Under California Labor Code § 203, if an employer willfully fails to pay all earned wages (including accrued vacation) on the final payday (immediately upon involuntary termination, or within 72 hours of resignation), the employee's wages continue to accrue at their daily rate as a statutory penalty for each day payment is delayed, up to a maximum of 30 full calendar days.
