Understanding terminal leave, leave sell-back, and separation cash flow
Introduction: three ways unused military leave turns into value
Every day of leave still on your books when you leave active duty can become one of three things: terminal leave (you stay on the rolls and burn the days at the end, drawing full pay and allowances), sell-back (DFAS converts the days into a lump sum of basic pay, limited to 60 days over a career), or forfeiture (days you can neither take nor sell). The right mix depends on your pay, your allowances, how many sell-back days you have already used, and how much time you want between your last duty day and your next job.
This calculator models the decision the way finance does: it projects your balance through your date of separation with the official accrual bands (leave keeps accruing while you are on terminal leave), enforces the 60-day career sell-back cap, previews the withholding on sold days, prices terminal leave with the allowances that keep flowing, and prints the calendar date your terminal leave would need to start. It does not compute statutory separation pay or severance pay.
For separation planning, compare three timelines together: leave earned before your date, leave you can take as terminal leave, and any balance you may sell back.
The formula: a sold day versus a terminal-leave day
DoD pay computations treat every month as 30 days, so the daily rate behind both options is the same:
Daily Basic Pay
=
Monthly Basic Pay
30
A sold day pays that daily rate and nothing else, and it is taxable wages. The cash preview after typical withholding is:
Sell-Back Net
=
Days Sold
×
Daily Basic Pay
×
(
1
−
w
)
where w is the withholding preview: the 22 percent flat federal supplemental rate DFAS typically applies, plus 7.65 percent FICA if you leave that option selected. A terminal-leave day pays the same taxable daily basic pay plus your untaxed allowances:
Terminal Cash
=
Days on Terminal Leave
×
(
Daily Basic Pay
+
BAH
+
BAS
30
)
Because basic pay is taxed in both options, the honest per-day difference is not the withholding, which evens out when you file your return. The durable advantages of terminal leave are the untaxed allowances (BAH and BAS keep flowing), continued benefits and accrual while on leave, and time to transition; the advantage of sell-back is cash without spending calendar days, at the cost of career-cap capacity.
Plain-text formula: dailyBasicPay = monthlyBasicPay ÷ 30 (DoD 30-day convention); sellBackGross = daysSold × dailyBasicPay; sellBackNet = sellBackGross × (1 − w), w = 22% federal supplemental withholding plus optional 7.65% FICA; terminalCash = daysTerminal × (dailyBasicPay + (BAH + BAS) ÷ 30); projectedBalance = currentBalance + bandAccrual(as-of date → separation date), where each month credits f(lastDayServed) − f(firstDayServed) + 0.5 with f(d) = min(2.5, 0.5 × ceil(d ÷ 6)); terminalStartDate = separationDate − daysTerminal + 1.
Source/version metadata: sell-back authority and the 60-day career cap per 37 U.S.C. 501 and DoD FMR Volume 7A, Chapter 35 , paragraphs 2.1.1.2.1 and 2.2.1.1 (DFAS pays sold leave as basic pay only, with no BAH or BAS); terminal-leave and accrual rules per FMR paragraph 2.2.2 and DoD Instruction 1327.06 and service regulations such as DAFI 36-3003; FMR edition March 2024, last reviewed August 2026. Verify entitlements with your LES, your finance office, and your transition counselor.
Leave keeps accruing until your date of separation
Terminal leave does not stop the accrual clock. You remain on active duty through your date of separation, and active duty earns leave at 2.5 days per month, credited in the official half-day bands of six days rather than by averaging month lengths. Members planning several months out routinely underestimate their final balance for exactly this reason: a member with 50 days on the April LES who separates on 31 August has 60 days to work with, not 50.
The crediting rule itself is in DoD FMR Volume 7A, Chapter 35, paragraph 2.2.2: leave accrues at 2½ days for each month of active service, and for partial months at ½ day for any period of six days or less. Writing f (d ) for the leave credited through day d of a month, a month served from day a through day b credits:
Month Credit
=
f
(
b
)
−
f
(
a
)
+
0.5
,
f
(
d
)
=
min
(
2.5
,
0.5
×
⌈
d
6
⌉
)
When you enter your balance date and separation date, this calculator credits every intervening month with the same band function the pay system uses, the way the military leave accrual calculator does for fiscal-year planning. If you skip the separation date, it simply prices the balance you entered.
The 60-day career sell-back cap and the taxes on sold leave
Since 10 February 1976, federal law has limited payment for unused leave to 60 days over an entire military career , counting enlisted and officer service together. Under 37 U.S.C. 501(f) the number of payable days “may not exceed sixty, less the number of days for which payment has been previously made” after 9 February 1976, and DoD FMR Volume 7A, Chapter 35, paragraph 2.1.1.2.1 restates the same ceiling. Days can be sold at reenlistment, at the first voluntary extension of an enlistment, at retirement, or at discharge or separation under honorable conditions; each sale consumes capacity permanently. A member who sold 30 days at a mid-career reenlistment has only 30 left to sell at retirement, no matter how large the final balance is.
Two clarifications matter here because they are widely misreported. First, the one-time payment an enlisted member may elect for up to 30 days of excess special leave accrual is charged against the same 60-day career total (FMR paragraph 2.1.1.3), so it does not create extra capacity. Second, the genuine exceptions to the 60-day ceiling are narrow (FMR paragraph 2.1.1.4): leave accrued by Reserve Component members serving in support of a contingency operation, leave accrued on active duty of more than 30 but not more than 365 days on or after 1 October 2001, and leave accrued by a member who dies on active duty. If none of those describe you, treat 60 days as a hard career limit.
Sold leave is basic pay only: FMR paragraph 2.2.1.1 states plainly that “leave earned is valued using only basic pay,” so no BAH, no BAS, and no special or incentive pays ride along. Payments for accrued leave are normally subject to taxation and income tax withholding (FMR paragraph 2.3.1), and DFAS typically withholds federal income tax at the flat 22 percent supplemental-wage rate plus Social Security and Medicare. The withholding preview here is a cash-flow estimate, not your final tax bill, which is settled on your return. The one common tax exception is leave earned in a combat zone, which is paid free of federal withholding within the limits described in FMR paragraph 2.3.2; this calculator does not model that case.
Worked example: splitting 60 days between cash and terminal leave
Scenario: your LES dated 30 April shows monthly basic pay of $4,800, BAH of $2,100, BAS of $450, and a 50.0-day leave balance. You separate on 31 August of the same year and have already sold 10 days at a past reenlistment. You are weighing selling 20 days and taking the rest as terminal leave.
Project the balance to separation. May through August add 10.0 more days under the accrual bands, so you will have 50 + 10 = 60.0 days to allocate, and the career cap leaves 60 − 10 = 50 sellable days.Price a day each way. Daily basic pay is $4,800 ÷ 30 = $160.00; allowances add ($2,100 + $450) ÷ 30 = $85.00 per day on terminal leave only.Value the sold days. 20 × $160.00 = $3,200.00 gross; after the 29.65 percent withholding preview (22 percent federal plus 7.65 percent FICA), about $2,251.20 in cash.Value the terminal leave. The remaining 40 days pay 40 × ($160.00 + $85.00) = $9,800.00 in pay and allowances, and the leave must start by Jul 23 (40 days counting back from, and including, 31 August).Combine. The split plan previews at $2,251.20 + $9,800.00 = $12,051.20 , against $14,700.00 for taking all 60 days as terminal leave or $8,078.00 for selling the maximum 50 and taking only the last 10 as terminal leave.
Enter those inputs above and the calculator reproduces each figure, including the start dates. Note what drives the ranking: every day converted from terminal leave to sell-back gives up $85.00 of untaxed allowances and the withholding bite, in exchange for not spending the calendar time.
Comparison: terminal leave, sell-back, or using leave earlier
How the three ways of consuming a leave balance differ
Option
What you receive
Key advantages
Key trade-offs
Terminal leave
Basic pay plus BAH, BAS, and other allowances for each day, while remaining on active duty until separation.
Highest cash value per day; time to move, job-hunt, or start work early; benefits continue; leave keeps accruing.
Needs commander approval; spends calendar days; a new job may overlap military status rules.
Sell-back
A lump sum of basic pay only, taxed as wages, for up to 60 days per career.
Cash without waiting out the days; useful when duty prevents taking leave.
No allowances; withholding up front; burns career cap capacity permanently.
Using leave earlier
Normal pay and allowances during your career.
Rest and family time when it matters; avoids fiscal-year use-or-lose losses.
Fewer days left for the transition runway at separation.
How to use this terminal leave and sell-back calculator
Pull three numbers from your latest LES: monthly basic pay, your leave balance (CR BAL), and the LES cutoff date. Enter your BAH and BAS if you receive them, your separation date if you have one, and any days you have already sold back in your career. Then either leave the split field blank to compare the two pure strategies, or enter the days you are considering selling to price a specific split. The results show the projected balance on your separation date, each scenario’s cash preview and terminal-leave start date, a comparison chart, and copy/CSV export for a conversation with your transition counselor. For the fiscal-year side of the problem, days above the carryover cap before you separate, use the companion military leave accrual calculator ; at the same retirement milestone, the SBP premium calculator covers the survivor benefit election, and the federal employee leave calculator covers the civilian rules if you continue into federal service.
Assumptions and limitations of this separation model
Withholding preview, not a tax return. The sell-back net applies a flat 22 percent federal rate plus optional 7.65 percent FICA. It ignores state tax, the Social Security wage base, and your actual bracket; terminal-leave figures are shown gross for the same reason.Allowances entered by you. BAH and BAS come from your LES; the tool does not look up rate tables, and it assumes both continue through terminal leave at the entered rates.Continuous accrual. The projection assumes every day between your balance date and separation date accrues leave; excess leave, AWOL, and broken service are not modeled.Career cap enforced, not audited. The 60-day cap is applied against the days-already-sold figure you enter; your master pay record is the authority on capacity actually remaining.Whole balance allocated. Scenarios assume every projected day is either sold (within the cap) or taken as terminal leave; days you cannot do either with are flagged as at risk rather than silently dropped.Not separation pay. Statutory involuntary separation pay, disability severance, and the fiscal-year use-or-lose calculus are out of scope.Combat-zone leave not modeled. Leave earned in a combat zone or qualified hazardous duty area is paid free of federal withholding within the limits in FMR paragraph 2.3.2; entering it here will understate your net.
Sources checked for the sell-back and accrual rules
Every rule this page enforces was read back against the primary text rather than a summary. The three load-bearing claims — the 60-day career cap, basic pay only on sold days, and the 1/30 daily rate — come from the following:
60-day career cap. 37 U.S.C. 501(f) : the days paid “may not exceed sixty, less the number of days for which payment has been previously made” after 9 February 1976. Restated in DoD FMR Volume 7A, Chapter 35 (March 2024), paragraph 2.1.1.2.1, with the one-time SLA payment charged against the same total at paragraph 2.1.1.3 and the narrow exceptions at paragraph 2.1.1.4.Basic pay only; no BAH or BAS on sold days. 37 U.S.C. 501(b)(1) pays for leave “on the basis of the basic pay to which the member was entitled on the date of discharge,” and FMR Chapter 35, paragraph 2.2.1.1 states that “leave earned is valued using only basic pay.” Nothing in either text extends allowances to sold days, which is why this calculator applies BAH and BAS to terminal-leave days alone.The 1/30 daily rate. FMR Chapter 35, paragraph 2.3.2 works an example in which an officer on $9,034.50 of monthly basic pay is credited $752.88 for 2.5 days of leave; $9,034.50 ÷ 30 × 2.5 = $752.88, confirming the 30-day month convention used above.Accrual and partial months. FMR Chapter 35, paragraph 2.2.2 (2½ days per month of active service, ½ day for any partial period of six days or less) and DoD Instruction 1327.06 , which also governs terminal leave as ordinary chargeable leave carrying full pay and allowances.Taxation of the payment. FMR Chapter 35, paragraph 2.3.1 (payments for accrued leave are normally subject to taxation and income tax withholding) with the flat supplemental-wage withholding rate from IRS Publication 15 (Circular E) and the 7.65 percent combined FICA rate.
Rules verified against the March 2024 edition of DoD FMR Volume 7A, Chapter 35 and the current preliminary edition of Title 37. Regulations change; DFAS, your finance office, and your own LES remain the authority on your entitlement.
Terminal leave and sell-back: frequently asked questions
Is military leave sell-back taxed?
Yes. Sold leave is taxable basic pay: DFAS typically withholds federal income tax at the 22 percent flat supplemental-wage rate, and Social Security and Medicare taxes (7.65 percent combined below the wage base) are also deducted. Your final liability is settled when you file, and state tax may apply. BAH and BAS are never part of sell-back pay.
How many days of leave can I sell back in a military career?
60 days total, counting every reenlistment, retirement, or separation payment made after 9 February 1976 across enlisted and officer service (37 U.S.C. 501(f); DoD FMR Volume 7A, Chapter 35, paragraph 2.1.1.2.1). The one-time payment for excess special leave accrual days is charged against the same 60, so it adds no capacity; the real exceptions are narrow Reserve Component cases and death on active duty. Confirm your remaining capacity with finance before counting on it.
Do I keep earning leave while on terminal leave?
Yes. Terminal leave is ordinary chargeable leave, so you remain on active duty and keep accruing 2.5 days per month through your date of separation. This calculator credits that accrual with the official partial-month bands when you enter a separation date.
Do BAH and BAS continue during terminal leave?
Yes. On terminal leave you draw your full pay and allowances, including BAH and BAS, exactly as if you were still at work. Sold days pay basic pay only, which is why a terminal-leave day is usually worth more than a sold day even before taxes.
Is terminal leave guaranteed?
No. Terminal leave is chargeable leave approved by your unit commander, and it can be disapproved for military necessity. Submit the request early, and ask about pairing it with transition programs such as SkillBridge where your service allows it.
When should terminal leave start?
Count backward from your date of separation: taking N days of terminal leave means starting N minus 1 days before that date, since leave runs through the final day. Enter your separation date above and the calculator prints the start date for each scenario.
Can I sell back use-or-lose leave in the middle of a tour?
No. Payment for unused leave happens only at reenlistment, the first voluntary extension of an enlistment, retirement, discharge or separation under honorable conditions, or death (DoD FMR Volume 7A, Chapter 35, paragraph 2.1.1). Days above the 60-day fiscal-year carryover cap must be taken or protected by special leave accrual before 30 September, which the companion military leave accrual calculator projects month by month.