Federal Employee Annual Leave Payout Calculator (2026)
When you retire from federal service, every hour of unused annual leave converts to cash — paid by your agency at your full hourly rate as though you had stayed on the job. Unlike sick leave (which converts to service credit), annual leave has a direct dollar value. A GS-14 in the DC area retiring with 240 hours of annual leave pockets roughly $20,000 before taxes.
This calculator projects your annual leave balance at retirement, computes your gross lump-sum payout, and estimates federal income tax and FICA withholding — including the Social Security wage base effect that can meaningfully increase your net if you retire mid-year at a higher salary.
How the annual leave lump sum works at retirement
Your lump-sum annual leave payment is not paid by OPM — it is paid by your employing agency as part of your final paycheck. It is separate from your FERS annuity (which is paid by OPM starting after processing). This timing matters: your annual leave payout arrives quickly, while OPM typically takes 50–100 days to finalize your annuity and begin regular payments. During that gap, interim pay (60–80% of your estimated annuity) covers you — but the lump sum is real cash in hand on or shortly after your retirement date.2
Because the lump sum is classified as supplemental wages, your agency withholds at the IRS 22% flat rate (not the graduated rate table). This means most federal employees are under-withheld at the source — a GS-14 in the 32% or 35% bracket will owe additional tax when they file. Plan accordingly by setting aside an extra 10–15% for April. If your total supplemental wages (lump sum + any bonuses) in the calendar year exceed $1 million, the mandatory 37% rate applies to the excess.3
Example: GS-13 Step 8, National Capital Region, retiring with 240 hours
- Annual base pay with locality: $135,000
- Hourly rate: $135,000 ÷ 2,087 = $64.67/hr
- Gross lump sum: 240 × $64.67 = $15,521
- Federal withholding (22%): $3,415
- YTD wages at retirement (July): ~$78,750 → SS exposure remaining: $184,500 − $78,750 = $105,750 → SS withheld: $15,521 × 6.2% = $962
- Medicare: $15,521 × 1.45% = $226
- Estimated net payout: $10,918
The 240-hour rule and use-or-lose timing
While you are still employed, you can only carry a maximum of 240 hours of annual leave from one leave year to the next (720 hours for SES).4 Any hours above that limit are forfeited at the end of the leave year — this is the "use-or-lose" deadline. For leave year 2026, that deadline is January 9, 2027.
At retirement, however, all accumulated annual leave is paid out, regardless of how far above 240 hours your balance is. The key planning point: if you are carrying more than 240 hours and plan to retire within the next few months, your retirement date relative to January 9, 2027 determines whether you lose anything:
- Retiring on or before January 9, 2027: You receive the lump-sum payment for your full balance — nothing is forfeited.
- Returning to work in the 2027 leave year (on or after January 10, 2027) and then retiring: If your 2026 balance was above 240 at year-end, the excess was forfeited at the leave-year boundary. You start 2027 with 240 hours and accrue from there.
The practical implication: if you are planning to retire in early 2027 and currently carry a large balance, weigh the annuity-start delay against the leave dollars you would forfeit by crossing into the 2027 leave year.
Accrual rates by service tier
| Service length | Accrual per pay period | Total per year | Days per year |
|---|---|---|---|
| Less than 3 years | 4 hours | 104 hours | 13 days |
| 3 to 15 years | 6 hours (+4 final PP) | 160 hours | 20 days |
| 15 or more years | 8 hours | 208 hours | 26 days |
Part-time employees accrue leave pro-rated to their tour of duty. Leave without pay periods of 80+ hours in a pay period do not generate accrual. Military service generally credits toward the service length tier.
Annual leave vs. sick leave: the key difference at retirement
These two leave types work completely differently at retirement:
| Annual leave | Sick leave | |
|---|---|---|
| Payout at retirement | Full lump sum (cash) | No cash value |
| Retirement benefit | One-time payment | Added service credit (months) |
| Tax treatment | Ordinary income, 22% withholding | Not taxable — no payment |
| Strategy | Bank it; never trade it for sick leave | Accumulate; time partial months carefully |
The critical rule: never use annual leave to cover a sick day unless you have exhausted all sick leave. Each annual leave hour is worth your hourly rate in cash. Each sick leave hour contributes to service credit worth roughly $0.08–$0.10/hr over a 25-year retirement. Annual leave is almost always worth more per hour.
Related tools and guides
- FERS Sick Leave Credit Calculator — Project how many months of service credit your sick leave generates and the dollar value of those months added to your FERS annuity.
- Sick Leave & Annual Leave at Retirement — Full Guide — 174-hour sick leave conversion rule, annual leave lump-sum formula, use-or-lose deadline strategy, and retirement timing decisions.
- When to Retire from the Federal Government — The six interacting variables: annual leave timing, sick leave optimization, high-3 salary, FEHB 5-year rule, FERS supplement eligibility, and end-of-month annuity rule.
- First Year of Federal Retirement — Cash Flow Guide — Month-by-month breakdown of OPM interim pay, annual leave lump sum timing, FEHB changes, and when your full annuity payment begins.
- FERS Retirement Calculator — Model your total retirement income: FERS annuity, FERS supplement, estimated TSP, and Social Security.
Model the full picture with a federal benefits specialist
Annual leave payout is one piece of your retirement income picture. A federal benefits specialist can analyze your optimal retirement date (balancing leave payout, sick leave credit, high-3 timing, and FEHB 5-year rule), model your TSP withdrawal sequence, structure your survivor annuity election, and integrate FERS with Social Security — across your specific grade, agency, and retirement eligibility date.
- OPM — Lump-Sum Payments for Annual Leave (opm.gov). Lump-sum payment equals unused annual leave hours × adjusted hourly rate of basic pay (annual pay ÷ 2,087 standard OPM work year). All accumulated annual leave at retirement is paid; the 240-hour carryover cap applies only to year-to-year carry while employed. Regulations: 5 CFR Part 550 Subpart L. Verified May 2026.
- OPM — Interim Retirement Payments (opm.gov). Annual leave lump sum is paid by the employing agency as part of final pay. OPM interim pay (60–80% of estimated annuity) covers the period while OPM processes the retirement claim; average processing time April 2026: 50 days digital / 100 days paper. Also: OPM Annual Leave Fact Sheet.
- IRS Publication 15 (Circular E) 2026 (irs.gov). Supplemental wage withholding: 22% flat rate on supplemental wages up to $1 million in a calendar year; 37% mandatory rate on the portion exceeding $1 million. Annual leave lump sums are supplemental wages. Actual income tax liability depends on the employee's total taxable income for the year — the 22% withholding may under- or over-collect. Social Security rate 6.2% on wages up to the $184,500 2026 wage base (SSA); Medicare rate 1.45% with no ceiling. Additional Medicare Tax of 0.9% applies to wages over $200,000 (single) / $250,000 (MFJ) — not withheld by employer unless total wages exceed $200K. IRS Topic 751; SSA Contribution and Benefit Base.
- OPM — Annual Leave for Federal Employees (opm.gov). Annual leave carryover limit: 240 hours (30 days) for most GS and WG employees; 720 hours for SES, Senior Professional (ST/SL), and equivalent. Leave year 2026 ends January 9, 2027; leave year 2027 begins January 10, 2027. Any annual leave in excess of the carryover limit forfeited at leave-year end if employee is still on rolls. Restored leave procedures under 5 U.S.C. § 6304(d). Verified May 2026.
Hourly rate formula (annual pay ÷ 2,087), carryover limits, and accrual rates verified against OPM fact sheets and 5 CFR Part 550 Subpart L. Tax withholding rates (22% supplemental, 6.2% SS, 1.45% Medicare) verified against IRS Publication 15 (2026) and SSA wage base ($184,500 for 2026). Leave year end date (January 9, 2027) per OPM leave year schedule. Values current as of May 2026.