Your final paycheck should include all wages you earned through your last day of work, including regular pay, overtime and any commissions or bonuses you've already earned. Depending on your state and your employer's policy, it may also include a payout of unused vacation or PTO.
When that final paycheck is due depends mostly on state law, not federal law. This guide covers what's typically included, what can be deducted, how extra payments are taxed, and how to check the math.
What a Final Paycheck Usually Includes
| Item | Usually included? | Notes |
|---|---|---|
| Regular wages through your last day | Yes | Including a partial pay period |
| Overtime | Yes | At least 1.5× the regular rate for non-exempt hours over 40 in a workweek |
| Earned commissions and bonuses | Usually | Depends on the plan's terms and state law |
| Unused vacation or PTO | Depends | Set by state law and employer policy |
| Unused sick leave | Often not | Depends on state law and policy |
| Severance | Only if offered | Not required by federal law; often paid separately |
| Expense reimbursements | Yes, if owed | Usually not taxable when paid under an accountable plan |
Unused vacation and PTO
Federal law doesn't require employers to pay out unused vacation. Some states, with California the best-known example, treat earned vacation as wages that must be paid when you leave. Other states let the employer's written policy decide, which can mean no payout at all. Check your employee handbook and your state labor department to see which rules apply to you.
Commissions and bonuses
Your right to a commission or bonus after leaving usually depends on the plan's terms, such as whether the sale had to close or the bonus period had to end while you were employed. If you're unsure, ask for the plan document in writing.
When Your Final Paycheck Is Due
The federal Fair Labor Standards Act doesn't require employers to give you your final pay immediately. Under federal law, it can wait until the next regular payday.
Many states set their own deadlines, and these often differ for employees who quit and employees who are let go. Some states require payment on your last day or within a day or two of a termination; others allow the next regular payday. Your state labor department publishes its rules, and that's where to turn if your final paycheck is late.
Deductions From Your Final Paycheck
Your final paycheck has the same taxes as any other: federal income tax withholding, Social Security, Medicare, and state and local taxes where they apply. It also usually includes your normal benefit deductions, such as health premiums or 401(k) contributions, for the period you worked.
Some employers try to recover money you owe, such as a pay advance, an equipment charge or overpaid PTO. Whether they can take that from your final paycheck depends on state law and, often, your written authorization. Under federal rules, deductions for items that mainly benefit the employer, such as tools or equipment, can't reduce a non-exempt employee's pay below the minimum wage. If a deduction looks wrong, ask for an explanation in writing.
How Extra Payments Are Taxed
PTO payouts, severance and bonuses paid separately from regular wages are generally treated as supplemental wages. Employers can withhold federal income tax at a flat 22% on these payments (37% on supplemental wages over $1 million in a year). Social Security and Medicare still apply, and state withholding rules for supplemental pay vary. Our supplemental wages guide explains the rules.
The flat 22% is a withholding rate, not your final tax. Your actual tax is figured on your return, so you may get some back or owe a bit more depending on your full-year income.
Worked Example: Final Paycheck With a PTO Payout
Take a single filer in Kansas earning $58,000 a year, paid semimonthly. Their regular semimonthly paycheck is estimated at $2,416.67 gross and $1,931.10 net, using our paycheck calculator. They leave with 40 hours of unused PTO, and their employer pays it out.
- Hourly equivalent: $58,000 ÷ 2,080 hours = $27.88 an hour. (See converting salary to hourly.)
- PTO payout: 40 hours × $27.88 = $1,115.38.
- Federal withholding at 22%: $245.38.
- Social Security (6.2%): $69.15.
- Medicare (1.45%): $16.17.
- PTO after federal taxes: $784.68, before Kansas withholding.
| Final pay component | Gross | Net (estimate) |
|---|---|---|
| Last full semimonthly period | $2,416.67 | $1,931.10 |
| PTO payout (40 hours) | $1,115.38 | $784.68 before state tax |
Kansas also withholds state income tax on the payout, which will lower the net figure further; check the Kansas Department of Revenue for its supplemental withholding method. The regular paycheck estimate comes from the Kansas paycheck calculator. If your last period is partial, your regular wages will be lower, and the employer may prorate salary by workdays.
Benefits and Accounts When You Leave
- Health coverage: usually ends on your last day or at the end of that month. You may be offered continuation coverage, often called COBRA, at full cost.
- 401(k): your own contributions are always yours; employer contributions follow the plan's vesting schedule. See 401(k) employer match.
- HSA: the account belongs to you and stays with you after you leave.
- Health or dependent care FSA: contributions stop, and plans differ on claims for expenses after your last day.
- W-2: your employer sends it after the year ends, to the address on file. Update your address before you go.
How to Check Your Final Paycheck
Compare the hours and dates on your last stub against your own records, confirm any PTO balance from your last regular stub, and check that commissions and expense reimbursements are listed. If something is missing, raise it with payroll in writing first. If that doesn't resolve it, your state labor department or the U.S. Department of Labor's Wage and Hour Division can help. Our guide to spotting and fixing paycheck errors covers next steps.
Frequently Asked Questions
Do I have to be paid for unused vacation when I quit?
It depends on your state and your employer's written policy. Federal law doesn't require it, but some states do.
Why was so much tax taken from my PTO payout?
PTO paid separately is often withheld at the flat 22% federal supplemental rate, plus Social Security, Medicare and state tax. Any over-withholding is settled when you file your return.
Can my employer hold my final paycheck until I return equipment?
Many states don't allow employers to withhold earned wages for that reason. Check your state labor department's rules.
Is severance part of my final paycheck?
Severance isn't required by federal law and is often paid separately under a severance agreement. When it is paid, it's taxable wages.
Sources
- U.S. Department of Labor: Fair Labor Standards Act
- IRS Publication 15 (Circular E), Employer's Tax Guide
- U.S. Department of Labor: Overtime Pay
Run the numbers for your state
Written and checked against IRS, Social Security Administration and state tax agency publications for the 2026 tax year. General information, not tax, legal or financial advice. Read our editorial policy, calculation methodology and sources.