{"id":100234,"date":"2023-04-24T22:24:47","date_gmt":"2023-04-24T20:24:47","guid":{"rendered":"https:\/\/factorialhr.com\/blog\/?p=100234"},"modified":"2025-05-17T05:02:06","modified_gmt":"2025-05-17T03:02:06","slug":"vacation-payout","status":"publish","type":"post","link":"https:\/\/factorialhr.com\/blog\/vacation-payout\/","title":{"rendered":"Vacation payout: State laws, taxes &#038; management tips"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">While defining your company\u2019s paid time off policy, there&#8217;s much to consider. You&#8217;ve got to decide whether PTO accrues from year to year and think about what happens when employees don\u2019t use their days off. <strong>If your company has a paid time off policy, your company will also need to have a vacation payout policy.<\/strong><\/span><\/p>\n<p><span style=\"font-weight: 400;\">As with <\/span><span style=\"font-weight: 400;\">paid time off laws<\/span><span style=\"font-weight: 400;\">, and <\/span><span style=\"font-weight: 400;\">paid sick leave laws<\/span><span style=\"font-weight: 400;\">, the laws governing vacation payout vary from state to state. And for employers working with global teams in various corners of the US, this can be somewhat difficult to manage, let alone navigate tax-related issues that accompany the payout of vacation to terminated employees.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this guide, we\u2019ll provide all that you need to know about vacation payout laws, requirements for employers, and tax compliance laws to be aware of. Then, we\u2019ll discuss the best practices for things like tracking accrued vacation. Finally, we&#8217;ll go over practices to pay employees efficiently and accurately.<\/span><\/p>\n<p><strong>TABLE OF CONTENTS<\/strong><\/p>\n<ul>\n<li><a href=\"#what\">What is vacation payout<\/a><\/li>\n<li><a href=\"#require\">Employer vacation payout requirements<\/a><\/li>\n<li><a href=\"#state\">State PTO payout requirements<\/a><\/li>\n<li><a href=\"#taxes\">Vacation payout taxes<\/a><\/li>\n<li><a href=\"#vacation\">Is vacation payout subject to higher taxes?<\/a><\/li>\n<li><a href=\"#accrual\">Keeping track of accrued vacation pay<\/a><\/li>\n<li><a href=\"#payout\">Providing accurate vacation payout<\/a><\/li>\n<li><a href=\"https:\/\/factorialhr.com\/holidays-leaves-software\">PTO accrual management software \u2705<\/a><\/li>\n<\/ul>\n<h2><a name=\"what\"><\/a><span style=\"font-weight: 400;\">What is vacation payout?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Vacation payout or \u201cPTO payout\u201d is a <strong>payment that employees receive for unused vacation time.<\/strong> Employees might receive vacation payouts for unused days after the end of a calendar year or upon the <\/span><a href=\"https:\/\/factorialhr.com\/blog\/termination-of-employment-contract\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">termination of their contract<\/span><\/a><span style=\"font-weight: 400;\">. Like <a href=\"https:\/\/factorialhr.com\/blog\/managing-paid-time-off\/\" target=\"_blank\" rel=\"noopener\">paid time off policies<\/a> and severance pay policies, employers define vacation payout policies in an employee\u2019s compensation agreement.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Not all companies in the United States provide vacation payouts to their employees.<\/strong> And it&#8217;s important to realize that individual practices and legal obligations might differ depending on where the company and team members are located.<\/span><\/p>\n<p><em><strong>Related: <a href=\"https:\/\/factorialhr.com\/blog\/2024-holiday-calendar-template\/\" target=\"_blank\" rel=\"noopener\">Federal Holiday Calendar &amp; Holidays by State<\/a><\/strong><\/em><\/p>\n<p><span data-sheets-root=\"1\">Take control with intuitive <a href=\"https:\/\/factorialhr.com\/\">Business Management Software.\ud83d\udc47<\/a><\/span><br \/>\n<a href=\"https:\/\/factorialhr.com\/\"><img decoding=\"async\" class=\"alignnone wp-image-158812 size-full\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2024\/02\/15165042\/Banner-Demo-Factorial-All-in-One-English.png\" alt=\"Business Management Software\" width=\"1212\" height=\"500\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2024\/02\/15165042\/Banner-Demo-Factorial-All-in-One-English.png 1212w, https:\/\/factorialhr.com\/wp-content\/uploads\/2024\/02\/15165042\/Banner-Demo-Factorial-All-in-One-English-300x124.png 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2024\/02\/15165042\/Banner-Demo-Factorial-All-in-One-English-1024x422.png 1024w, https:\/\/factorialhr.com\/wp-content\/uploads\/2024\/02\/15165042\/Banner-Demo-Factorial-All-in-One-English-768x317.png 768w\" sizes=\"(max-width: 1212px) 100vw, 1212px\" \/><\/a><\/p>\n<h2><a name=\"require\"><\/a><span style=\"font-weight: 400;\">Are employers required to payout vacation time?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><strong>The requirements for employers vary on a state-by-state basis.<\/strong> While there are no federal laws that require employers to offer paid time off to employees, or vacation payout to their employees, some states, like California or Massachusetts, require that employers offer paid leave and payout for unused vacation days.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Because paid time off payout is not a legal requirement for many employers, <strong>many choose to adopt a \u201cuse it or lose it\u201d policy, in which employees forfeit any accumulated days off at the time of their termination.<\/strong> Note here, that this practice is prohibited in certain states with mandatory vacation payout laws.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Other teams choose to adopt vacation payout policies, in addition to other <a href=\"https:\/\/factorialhr.com\/blog\/pto-benefits\/\" target=\"_blank\" rel=\"noopener\">PTO benefits<\/a> for employees. In these cases, the amount of vacation payout accrual that an employee is eligible for might differ depending on their employment status and length of tenure. In a similar fashion to other employee compensation and benefits practices, full-time employees and employees who have been at the company for more extended periods might be entitled to more vacation payout at termination.<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/templates\/pto-accrual-calculator\"><img decoding=\"async\" class=\"alignnone wp-image-114941\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/24114410\/PTO-accrual-calculator-banner-300x103.png\" alt=\"PTO calculator\" width=\"807\" height=\"277\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/24114410\/PTO-accrual-calculator-banner-300x103.png 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/24114410\/PTO-accrual-calculator-banner-768x263.png 768w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/24114410\/PTO-accrual-calculator-banner.png 900w\" sizes=\"(max-width: 807px) 100vw, 807px\" \/><\/a><\/p>\n<h2><a name=\"state\"><\/a><span style=\"font-weight: 400;\">Which states require payout of vacation?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Currently, <strong>fifteen states in the United States require PTO payout<\/strong> of some form. They go as follows:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Alaska<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Arizona<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">California<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Colorado<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Illinois<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Indiana<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Louisiana<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Maine<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Maryland<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Massachusetts<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Minnesota<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Nebraska<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">North Dakota<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ohio<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rhode Island<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">West Virginia<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In addition to mandatory vacation payout, certain states also prohibit employers from implementing a policy in which employees either use or lose paid time off. <strong>The following states prohibit \u201cuse-it-or-lose-it\u201d practices<\/strong>:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">California<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Colorado<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Montana<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Nebraska<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">West Virginia<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Wyoming<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In addition to the states that have an outright ban on use-it-or-lose-it policies, <strong>several states have laws that regulate this practice<\/strong>. Here are some special regulations that employers might need to be aware of:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>In Illinois<\/strong>, employers can give employees a time frame to use paid time off. While use-it-or-lose-it policies aren\u2019t banned, employers must give employees an adequate timeframe to use their vacation or <\/span><a href=\"https:\/\/factorialhr.com\/blog\/holiday-pay\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">holiday pay<\/span><\/a><span style=\"font-weight: 400;\">. Under Illinois law, employers must provide vacation payouts to terminated employees.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>In Massachusetts,<\/strong> it\u2019s a similar situation. Employers can have use-it-or-lose-it policies, but they must give employees enough time to actually take off. If they so choose, employers can also place a limit on the amount of PTO that employees can accrue. Once again, in the case of termination, employers must provide PTO payout.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>New York\u2019s law<\/strong> does not mandate employers to pay employees for unused time off. However, employers must give employees advance notice of any use-it-or-lose-it company policies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">There are specific circumstances <strong>in North Dakota<\/strong> in which employers don\u2019t have to pay employees vacation payout. Employers are not required to provide vacation payout if the employee receives notice of the company\u2019s payout policy, if employees have worked for less than a year, or if they gave employers less than five days of notice.<\/span><\/li>\n<\/ul>\n<p><em><strong>Related: <a href=\"https:\/\/factorialhr.com\/blog\/time-off-requests-excel-template\/\" target=\"_blank\" rel=\"noopener\">Managing employee holiday leave requests with Excel<\/a><\/strong><\/em><\/p>\n<h2><a name=\"taxes\"><\/a><span style=\"font-weight: 400;\">How is vacation payout taxed?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If your company offers employees PTO payout for their unused holiday hours, it\u2019s important to understand tax obligations and requirements. Luckily, the Internal Revenue Service provides clear <\/span><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/p15.pdf\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">guidelines for employers<\/span><\/a><span style=\"font-weight: 400;\"> regarding this issue. Here, we\u2019ll take a closer look at how to handle vacation payout taxes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Technically speaking, <strong>the IRS considers vacation payout to be a form of supplemental wage.<\/strong> Other types of <\/span><a href=\"https:\/\/factorialhr.com\/blog\/supplemental-pay\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">supplemental pay<\/span><\/a><span style=\"font-weight: 400;\"> include overtime pay, bonuses, commissions, severance pay, and reported tips.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, while taxing payout, employers should withhold the same taxes as they would for normal wages. Specifically, <strong>you should withhold federal, state, and local income taxes, social security,<\/strong> and <strong>Medicare<\/strong> from the amount.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Because vacation payout is a form of supplemental pay, there are some discrepancies to keep in mind while withholding taxes. While social security and Medicare are taxed at the same rate as normal wages (6.2% and 1.45% retrospectively), employers have the option to tax federal income tax slightly differently. <strong>Rather than applying the same income taxes, employers can take out a flat tax of 22% of the lump sum amount.<\/strong><\/span><\/p>\n<h2><a name=\"vacation\"><\/a><span style=\"font-weight: 400;\">Is vacation payout taxed at a higher rate?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The way that you take out federal income taxes depends on whether or not you\u2019ve already withheld taxes from the employee\u2019s normal wages over the past year.\u00a0<\/span><\/p>\n<p><b>If you have withheld taxes in the current or prior year, <\/b><span style=\"font-weight: 400;\">can choose to take out federal income taxes from vacation payouts in one of the following ways:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Take out a flat tax of 22% from the payout amount<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If you are paying the vacation payout at the same time as the employee\u2019s regular wages, you can combine the two and take out federal income taxes from the total amount.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If you are paying the employee\u2019s PTO payout and normal wages separately, you can get the correct tax liability by adding the employee\u2019s normal wages to the supplemental amount and calculating the federal tax withholding from both. Then, you would calculate employees&#8217; federal income tax withholdings from their normal wages. Finally, you would subtract the normal tax withholding from the total tax withholding to get the correct amount to be withheld from the PTO payout.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Conversely,<\/span><b> if you haven\u2019t withheld federal income taxes in the past or current year, <\/b><span style=\"font-weight: 400;\">you would determine federal vacation payout tax by:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Adding the vacation payout amount to the employee\u2019s normal wages. Then, while calculating the employee\u2019s payroll taxes at the end of a pay period, you would calculate and take out federal income taxes based on the entire amount.<\/span><\/li>\n<\/ul>\n<p><a href=\"https:\/\/factorialhr.com\/get-started\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone wp-image-89831 size-full\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/01\/05151547\/FREE-TRIAL-2023.jpg\" alt=\"\" width=\"675\" height=\"232\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/01\/05151547\/FREE-TRIAL-2023.jpg 675w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/01\/05151547\/FREE-TRIAL-2023-300x103.jpg 300w\" sizes=\"(max-width: 675px) 100vw, 675px\" \/><\/a><\/p>\n<h2><a name=\"accrual\"><\/a><span style=\"font-weight: 400;\">How to keep track of accrued time off<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In order to comply with individual state laws and to adhere to the company&#8217;s policy, it\u2019s critical to have a solid method of <\/span><a href=\"https:\/\/factorialhr.com\/blog\/time-off\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">tracking paid time off accrual<\/span><\/a><span style=\"font-weight: 400;\"> for employees in your team. There are many ways to do this.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Firstly, you can keep track of everything in an Excel spreadsheet<\/strong> or use a <\/span><a href=\"https:\/\/factorialhr.com\/templates\/pto-accrual-calculator\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">PTO accrual calculator template<\/span><\/a><span style=\"font-weight: 400;\"> to help you calculate the right amount. This method requires diligence, constant updating, and back-and-forth communication with your entire staff, which can be highly time-consuming.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>A more efficient and hassle-free solution would be using paid time off tracking software to automate the entire process.<\/strong> In other words, you wouldn\u2019t need to manually update time off allowances, or even handle individual <\/span><a href=\"https:\/\/factorialhr.com\/blog\/pto-requests\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">PTO requests<\/span><\/a><span style=\"font-weight: 400;\"> for that matter. With the right <\/span><a href=\"https:\/\/factorialhr.com\/blog\/pto-tracking-software\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">PTO tracking software<\/span><\/a><span style=\"font-weight: 400;\">, employees can request time off directly from their managers within seconds. Additionally, you\u2019ll be able to monitor how your team uses time off from year to year and make adjustments to your company policies based on your records.<\/span><\/p>\n<h2><a name=\"payout\"><\/a><span style=\"font-weight: 400;\">Paying out vacation time accurately<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When it comes to calculating vacation payout and employee compensation, small errors can create significant compliance issues and generate major problems. And while calculating time off accrual and payroll, <strong>you need to have the right tools to make sure that your processes are transparent and accurate. For that, It is important that you choose <a href=\"https:\/\/factorialhr.com\/blog\/pto-tracking-software\/\">the best PTO Tracking Software<\/a>.<\/strong><\/span><\/p>\n<p><span style=\"font-weight: 400;\">From payroll to employee absences, y<strong>ou can have everything all in one with Factorial.<\/strong> Essentially, it is the one-stop solution for companies looking to streamline their people processes. In addition to our <\/span><a href=\"https:\/\/factorialhr.com\/holidays-leaves-software\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">time off management software<\/span><\/a><span style=\"font-weight: 400;\">, Factorial allows you to:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Generate payslips<\/strong> and avoid payroll-related errors by automating the entire process.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Organize important employee and company documents<\/strong> like tax forms in one centralized location.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Request employee signatures<\/strong> and send updates and notifications to your team automatically.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Generate custom reports<\/strong> based on employee data and stay on top of key HR metrics, like employee turnover and attrition.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Automate time tracking,<\/strong> shift scheduling, talent acquisition, onboarding, performance reviews, and more.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Take the hassle out of your administrative processes and <\/span><a href=\"https:\/\/factorialhr.com\/get-started\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">get started with Factorial<\/span><\/a><span style=\"font-weight: 400;\"> today.<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/request-demo\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone wp-image-123482\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2020\/06\/14181056\/paid-time-off-pto-demo-300x103.png\" alt=\"leave tracking software\" width=\"801\" height=\"275\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2020\/06\/14181056\/paid-time-off-pto-demo-300x103.png 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2020\/06\/14181056\/paid-time-off-pto-demo-768x263.png 768w, https:\/\/factorialhr.com\/wp-content\/uploads\/2020\/06\/14181056\/paid-time-off-pto-demo.png 900w\" sizes=\"(max-width: 801px) 100vw, 801px\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>While defining your company\u2019s paid time off policy, there&#8217;s much to consider. You&#8217;ve got to decide whether PTO accrues from year to year and think about what happens when employees don\u2019t use their days off. If your company has a paid time off policy, your company will also need to have a vacation payout policy.<a href=\"https:\/\/factorialhr.com\/blog\/vacation-payout\/\" class=\"read-more\"> [&#8230;]<\/a><\/p>\n","protected":false},"author":155,"featured_media":100237,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[146],"tags":[],"class_list":["post-100234","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal-hr"],"acf":{"topics":"time-time-off"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.5 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Vacation Payout: State Laws, Taxes &amp; Management - Factorial<\/title>\n<meta name=\"description\" content=\"Vacation payout is something to consider when drafting PTO policies. We&#039;ll discuss state laws, tax requirements and tracking time off.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/factorialhr.com\/blog\/vacation-payout\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vacation payout: State laws, taxes &amp; management tips\" \/>\n<meta property=\"og:description\" content=\"Vacation payout is something to consider when drafting PTO policies. 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