New York PTO payout law

In New York, earned vacation is generally paid when a job ends unless a written policy says otherwise. Here is the rule, its source, and what your balance is worth.

New York vacation payout rule

Required unless a written policy says otherwise

In New York, vacation pay is a 'wage supplement' that your employer must provide according to its own policy. Unless a written policy you were notified of says unused vacation is forfeited, you are generally entitled to be paid for it when you leave.

Checked against the full official text · September 25, 2026

Payout when a job ends: Required unless a written policy says otherwise
Use-it-or-lose-it: Allowed with advance notice
State income tax on a payout: Withheld under state rules
Source: N.Y. Lab. Law §§ 198-c, 195(5) (opens in a new tab)

What your unused PTO is worth

Your PTO payout

New York · Required unless a written policy says otherwise

$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%

Required unless a written policy says otherwise

In New York, vacation pay is a 'wage supplement' that your employer must provide according to its own policy. Unless a written policy you were notified of says unused vacation is forfeited, you are generally entitled to be paid for it when you leave.

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 New York

The rule comes from N.Y. Lab. Law §§ 198-c, 195(5).

Employers must tell employees about their vacation policy in writing or by posting it.
The state labor department will not accept a claim where the written policy excludes accrued benefits for a stated reason, such as quitting without notice.

Use-it-or-lose-it. New York lets unused vacation lapse only under a rule employees were told about beforehand.

What to check in your policy

Look for a written clause on unused vacation at separation. If there is none, the time is generally owed. If there is one, it usually decides, so read what it says about quitting, being let go and notice periods.

Tax on a New York 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.

New York 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 New York require employers to pay out unused PTO?

Usually. In New York, vacation pay is a 'wage supplement' that your employer must provide according to its own policy. Unless a written policy you were notified of says unused vacation is forfeited, you are generally entitled to be paid for it when you leave.

Is use-it-or-lose-it vacation legal in New York?

Only with advance notice. New York lets unused vacation lapse only under a rule employees were told about beforehand.

How is a PTO payout taxed in New York?

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

Sources

Each source was read on September 25, 2026.