💰 Year-End PTO Decision: Our FREE PTO Cash-Out vs Carry-Over Analyzer 2026 helps US employees decide whether to cash out unused PTO or carry it over to next year. Used by thousands for year-end tax planning, use-it-or-lose-it decisions, and financial optimization. Based on IRS rules, state labor laws, and investment analysis.
Analyze whether to cash out or carry over for maximum financial benefit
If you have credit card debt > 15% APR, cash out and pay it off. The interest savings exceed investment returns.
If you have less than 3-6 months expenses saved, cash out builds emergency savings.
If your company has strict forfeiture rules, cash out is better than losing PTO entirely.
If you have specific travel plans next year, carry over ensures you have enough time off.
If in 32%+ tax bracket, deferring taxes via carry-over can save significant money.
If job security is high, carrying over provides flexibility for future needs.
Formula: Net Cash = Gross PTO × (1 - Federal Tax - State Tax - FICA 7.65%)
Example: $3,360 × (1 - 0.22 - 0.05 - 0.0765) = $2,196 net
Supplemental Rate: May be taxed at 22% federal flat rate initially
Formula: Future Value = PTO Value × (1 + Investment Return)^Years
Example: $3,360 × (1 + 0.07)¹ = $3,595 future value
Tax Deferral: Taxes paid only when PTO is actually used
Depends on your state law and company policy. In states like California, carried-over PTO must be paid out upon termination. In Texas, it depends on company policy. Always check your specific situation.
PTO cash-outs are supplemental wages and may be taxed at a flat 22% federal rate (37% if over $1 million). However, they're combined with your regular income for annual tax calculation, so you may get a refund or owe more at tax time.
Most companies have a December 31st deadline or the anniversary of your hire date. Some allow grace periods until March 15th. Some states (like CA, CO, NE) prohibit use-it-or-lose-it policies entirely.
Some companies allow split decisions - cash out some hours, carry over others. This can be optimal for balancing immediate cash needs with future time off. Ask your HR department about options.
Carried-over PTO usually doesn't affect next year's accrual - you'll continue earning new PTO at your normal rate. However, if you hit a company maximum (like 240 hours), further accrual may stop until you use some hours.
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Educational Tool Only: This analyzer provides financial estimates for educational purposes. It is not personalized financial, tax, or legal advice.
Company Policy Governs: Your employer's specific PTO policy controls all cash-out and carry-over options. Always consult your HR department.
Tax Complexity: Tax calculations are estimates based on 2026 IRS publications. Actual tax liability depends on your complete financial situation.
Investment Risk: Investment returns are not guaranteed. Past performance doesn't guarantee future results.
State Law Variations: State laws regarding PTO payout vary significantly. Consult your state labor department for specific regulations.
Last Update: January 1, 2026 | Next Review: July 1, 2026