What Is Paid Time Off (PTO)?

PTO (Paid Time Off) is a policy that bundles vacation days, sick days, and personal days into a single bank of time. When you take a day off for any reason, it comes from the same pool. PTO is accrued — meaning you earn hours each pay period (e.g., 4 hours per biweekly period = 13 days/year). Some states require payout of unused PTO upon termination (California, Illinois, Massachusetts), while others don't. Your paystub may show a PTO balance or accrual rate.

Common paystub code: PTO / VAC

Where You'll See Paid Time Off (PTO)

• On your paystub (earnings statement) under earnings, deductions, or taxes
• On your annual W-2 form (or 1099 for contractors)
• In payroll software (ADP, Paychex, Gusto, QuickBooks)
• In employer payroll reports and IRS filings

Related Terms

• vacation
• sick-leave
• accrual

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