District of Columbia PTO payout law

District of Columbia 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.

District of Columbia vacation payout rule

Depends on employer policy

D.C. law does not require employers to provide vacation or pay it out. If your employer has a vacation policy, the D.C. Office of Wage-Hour can help you claim pay owed under that policy.

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: D.C. Code §§ 32-1301(3), 32-1303 (opens in a new tab)

What your unused PTO is worth

Your PTO payout

District of Columbia · 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

D.C. law does not require employers to provide vacation or pay it out. If your employer has a vacation policy, the D.C. Office of Wage-Hour can help you claim pay owed under that policy.

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 District of Columbia

The rule comes from D.C. Code §§ 32-1301(3), 32-1303.

Final pay is due the next working day after a discharge, and by the next regular payday or within 7 days after you quit, whichever is earlier.
Unused paid sick leave does not have to be paid when employment ends.

Use-it-or-lose-it. We found no District of Columbia 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 District of Columbia 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.

District of Columbia 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 District of Columbia require employers to pay out unused PTO?

Not by law. D.C. law does not require employers to provide vacation or pay it out. If your employer has a vacation policy, the D.C. Office of Wage-Hour can help you claim pay owed under that policy.

Is use-it-or-lose-it vacation legal in District of Columbia?

Usually, if the written policy says so. We found no District of Columbia 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 District of Columbia?

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

Sources

Each source was read on September 25, 2026.