Connecticut PTO payout law

Connecticut law does not require unused vacation to be paid out, so your employer’s policy decides. Here is the rule, its source, and what your balance would be worth.

Connecticut vacation payout rule

Depends on employer policy

Connecticut requires payout of accrued vacation at termination only if the employer's policy or a collective bargaining agreement provides for it. When it does, you must be paid at least your average earned rate for the period the time was accrued.

Checked against the full official text · September 25, 2026

Payout when a job ends: Depends on employer policy
Use-it-or-lose-it: No state rule found
State income tax on a payout: Withheld under state rules
Source: Conn. Gen. Stat. § 31-76k (opens in a new tab)

What your unused PTO is worth

Your PTO payout

Connecticut · Depends on employer policy

$2,000.00 before tax, for 80 hours

Your PTO payout, line by line
Unused PTO 80 h × $25.00	$2,000.00
Federal income tax Flat 22% supplemental rate	−$440.00
Social Security 6.2%	−$124.00
Medicare 1.45%	−$29.00

Estimated after federal withholding

$1,407.00

Hourly value: $25.00
Share withheld: 29.65%

Depends on employer policy

Connecticut requires payout of accrued vacation at termination only if the employer's policy or a collective bargaining agreement provides for it. When it does, you must be paid at least your average earned rate for the period the time was accrued.

State and local income tax are not included. Your employer may withhold federal tax by the aggregate method instead of the flat rate; either way, the final tax is settled on your return.

The rule in Connecticut

The rule comes from Conn. Gen. Stat. § 31-76k.

Use-it-or-lose-it. We found no Connecticut statute or agency rule on use-it-or-lose-it policies, so the employer’s written policy usually decides.

What to check in your policy

Your handbook or offer letter decides. If it promises payout, that promise can usually be enforced. If it says unused time is forfeited, or says nothing, you may not be owed it. Keep a copy of the policy that was in force when you earned the time.

Tax on a Connecticut payout

A payout is taxable wages. Take 80 unused hours at $25.00 an hour, worth $2,000.00. Paid on top of regular wages, it is a supplemental payment, so many employers withhold $440.00 of federal income tax at the flat 22% rate, plus $124.00 of Social Security and $29.00 of Medicare, leaving about $1,407.00.

Connecticut income tax is withheld on top of that, under the state’s own rules, so you will receive somewhat less. Withholding is not the final tax; any difference is settled on your return.

Questions people ask

Does Connecticut require employers to pay out unused PTO?

Not by law. Connecticut requires payout of accrued vacation at termination only if the employer's policy or a collective bargaining agreement provides for it. When it does, you must be paid at least your average earned rate for the period the time was accrued.

Is use-it-or-lose-it vacation legal in Connecticut?

Usually, if the written policy says so. We found no Connecticut statute or agency rule on use-it-or-lose-it policies, so the employer’s written policy usually decides.

How is a PTO payout taxed in Connecticut?

Federally, a payout on top of regular wages is a supplemental payment: many employers withhold 22% for income tax, plus Social Security and Medicare. Connecticut income tax is withheld as well, under the state’s own rules.

Sources

Each source was read on September 25, 2026.