The rule in Nevada
The rule comes from Nev. Rev. Stat. § 608.0197.
Use-it-or-lose-it. We found no Nevada 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 Nevada 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.
Nevada does not tax wage income, so that is close to what you receive. Withholding is not the final tax; any difference is settled on your return.
Questions people ask
Does Nevada require employers to pay out unused PTO?
Not by law. Nevada does not require payout of unused vacation. For leave under the state's paid leave law, an employer may choose to pay it out but does not have to, and must restore it if it rehires you within 90 days after an involuntary separation.
Is use-it-or-lose-it vacation legal in Nevada?
Usually, if the written policy says so. We found no Nevada 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 Nevada?
Federally, a payout on top of regular wages is a supplemental payment: many employers withhold 22% for income tax, plus Social Security and Medicare. Nevada does not tax wage income, so no state income tax is withheld.