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PTO taxed

My employer includes my PTO payout in my pay stubs, is this being double taxed?


  • No, it is not. The wages are only included once - the PTO replaces the wages you would have otherwise been paid. Say, your salary is $1000 per week - you take one PTO day. Your pay stub should show $800 in salary and $200 in PTO. If your employer withheld tax on $1,000 salary and tax on $200 PTO, but only paid you $1,000, that would be twice the tax - however, you would recover the income tax withheld when you file your tax return. The Social Security and Medicare tax, however, would be over withheld and overpaid - both employee and employer shares.

  • I may have misunderstood your question. If this is a lump sum payout of PTO that you did not use, it is still taxable wages in addition to the taxes on your regular salary. The PTO is supplemental wages - that is, wages paid in addition to your regular pay, and may be taxed at a different rate than your regular pay. The employer may add it to the regular pay for the pay period - in which case the average withholding rate on the total will be greater than the average rate on your regular pay. Or it the employer may choose to use the optional flat supplemental withholding rate of 22% on just the PTO payout and withhold at the regular rate on your regular pay.