Wisconsin PTO payout law

In Wisconsin, 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.

Wisconsin vacation payout rule

Required unless a written policy says otherwise

In Wisconsin, payout depends on your employer's vacation or resignation policy. If there is a written vacation policy without a written forfeiture rule, the employer generally must pay earned, unused vacation.

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: Wis. Stat. ch. 109 (opens in a new tab)

What your unused PTO is worth

Your PTO payout

Wisconsin · 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 Wisconsin, payout depends on your employer's vacation or resignation policy. If there is a written vacation policy without a written forfeiture rule, the employer generally must pay earned, unused vacation.

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 Wisconsin

The rule comes from Wis. Stat. ch. 109.

A policy that requires notice of resignation can affect whether unused vacation is paid.

Use-it-or-lose-it. Wisconsin 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 Wisconsin 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.

Wisconsin 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 Wisconsin require employers to pay out unused PTO?

Usually. In Wisconsin, payout depends on your employer's vacation or resignation policy. If there is a written vacation policy without a written forfeiture rule, the employer generally must pay earned, unused vacation.

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

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

How is a PTO payout taxed in Wisconsin?

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

Sources

Each source was read on September 25, 2026.