Last updated on October 22, 2026
Each year, over 400 million days of paid time off go unused in the US.
The solution to this problem, you ask?
PTO Rollovers.
But are they right for your team? Let’s find out.
Regardless of whether you’re a total newbie when it comes to PTO rollovers or if you need a refresher, we’ve got you covered with everything you need to know about them right here. Keep reading to learn more!
What are PTO rollovers?
PTO rollovers are unused vacation days that employees carry forward from one year to be used in the next. This means that if you didn’t manage to take all your time off this year, rather than losing your accrued time, you’ll be able to use those days next year.
Just like regular PTO, employees can decide what to do with these days, either taking them all in one week or spreading them out throughout the entire year for an added long weekend here and there. If you're planning those days for next year, our guide to the best days to take off in 2027 shows where a few PTO days turn into long breaks.
Choosing a PTO rollover policy
It’s important to select the best PTO rollover policy based on your company’s culture, regional leave laws, and employee needs.
Here are three common options:
Use it or lose it time off policy
A use-it-or-lose-it vacation policy is exactly what it sounds like: Unused PTO expires at the end of the year. This means if you have eight vacation days accrued, you must use them before your PTO balance resets in the new year.
Some employers believe this policy incentivizes teams to take their PTO more regularly rather than saving it up or cashing it out. However, this policy is not allowed in several states and provinces.
In states like California and Montana, PTO is treated as earned wages and cannot be taken away. Instead, many employers opt for a PTO buyback or payout policy, where unused vacation time is paid out at the end of the year instead of being rolled over.
Some states ban forfeiting earned vacation. See PTO payout laws by state.
Limited rollover policy
The most common type of PTO policy is a limited rollover policy, which sets a limit on the amount of PTO employees can carry over. PTO accrual caps create a happy medium between encouraging regular PTO usage and providing employees with flexibility as to how and when they use their vacation days. This approach also helps prevent PTO hoarding, a term used to describe employees who accumulate large amounts of unused vacation days.
Unlimited rollover policy
An unlimited PTO rollover policy is exactly what it sounds like. Employers do not cap the amount of time off each employee can carry over. Employees can accumulate several years' worth of PTO if they like.
This is different than an unlimited PTO policy, where employees do not accrue vacation time at all, eliminating the need for rollover policies.
Expiration Dates
A rollover policy with expiration dates allows employees to carry over unused PTO, but they must use it within a specific timeframe. For example, rollover days might only be available to use during the first quarter of the new year. Similar to the limited rollover policy, this approach is slightly less flexible but still allows their team an opportunity to use up unused days, helps avoid the end-of-year PTO rush, and also prevents PTO hoarding.
Pros and Cons of a PTO Rollover Policy
To roll over or to not roll over? That is the question.
Let’s review the pros and cons to see if rollovers are right for your organization.
The Pros
Boosts employee retention: A PTO rollover policy shows employees that you’re flexible and understand the importance of taking time off. Employees will ultimately be happier working at a place that allows them to have the freedom to use their PTO as they see fit, making them more likely to stay at the company for longer.
Improves flexibility: Employees can organize their time off as needed. Planning a dream vacation abroad next year? Save unused days from this year and carry them over to make it happen.
Avoid end-of-year PTO rush: A rollover policy avoids the panic in December when all of your staff decide they need to use up weeks of remaining PTO. It helps to evenly distribute employee leave throughout the year without an unnecessary rush before the holidays.
The Cons
PTO hoarding: Without proper limits in place, your most loyal and dedicated employee could accrue months and months of time off. Are you prepared to respond to a 6-month-long leave request? Review your leave policy to ensure you have limits in place for the length of time employees can take off at once.
Scheduling conflicts: Allowing employees to bank loads of PTO can get messy, especially without accrual caps. Anticipate potential conflicts in scheduling time off for certain employees who have banked a lot of accrued days. This may lead to staff missing before an important deadline or even needing to hire temporary workers to fill in gaps.
Additional work for your HR team: Rollovers inevitably add some work for HR staff, as they need to calculate and track this information. With paper forms, emails, and spreadsheets for requesting, approving, and tracking employee time off, the amount of manual work required to keep all the numbers accurate and up to date can be overwhelming.
PTO rollover laws by US state (2026)
In the US, no federal law requires PTO rollover, and most states leave it to your written policy. Three states ban use-it-or-lose-it vacation policies: California, Colorado and Montana. Ten states allow them only with conditions, and Kansas and Texas allow them outright. The remaining 36 jurisdictions, including the District of Columbia, have no specific state rule.
This section covers vacation rollover. Some of the conditions below also concern payout when employment ends, so check both before setting an expiration date. The table includes all 50 states and the District of Columbia. At the federal level, the Fair Labor Standards Act doesn't require paid vacation at all (see the U.S. Department of Labor).
States that ban use-it-or-lose-it
- California: Earned vacation cannot be forfeited, and a general PTO bank counts as vacation. You can set an accrual cap. California guidance
- Colorado: Earned vacation cannot be forfeited. Accrual caps are allowed, but you cannot cap how much already earned vacation carries into the next year. Colorado guidance
- Montana: Use-it-or-lose-it policies are not allowed for earned vacation, although accrual caps are permitted. A combined PTO bank follows your policy. Montana guidance
States that allow it with conditions
- Illinois: Give employees notice of the policy and a reasonable opportunity to take their vacation. Illinois guidance
- Louisiana: Your policy sets vacation eligibility and accrual, but vacation earned under it cannot be forfeited when an employee leaves. Louisiana law
- Maine: The vacation statute does not require annual rollover. Covered employers with 11 or more employees working in Maine must pay out unused vacation accrued under their policy since January 1, 2023; exceptions include public employers and collective bargaining agreements that address vacation payout. Maine guidance
- Massachusetts: Give employees adequate advance notice of a use-it-or-lose-it policy. Accrual caps are allowed, and earned, unused vacation must be paid out when employment ends. Massachusetts guidance
- New York: Put forfeiture terms in a written or posted policy. New York guidance
- North Carolina: Give employees a written forfeiture policy in advance. North Carolina guidance
- North Dakota: Give employees a reasonable opportunity to take their time off. Unused time off is otherwise paid out when they leave, with two narrow exceptions that need written notice. North Dakota guidance
- West Virginia: Accrued vacation is part of final pay unless your written policy sets conditions. West Virginia law
- Wisconsin: Put forfeiture terms in your written vacation policy. If a written vacation policy has no forfeiture clause, earned, unused vacation generally must be paid out. Wisconsin guidance
- Wyoming: To deny payout when employment ends, you need a written forfeiture policy that the employee acknowledged in writing. Wyoming guidance
States with no rollover law
In the 36 jurisdictions with no state rule, and in Kansas and Texas where use-it-or-lose-it is allowed, your written policy decides rollover, so write it down and tell employees.
Use-it-or-lose-it rules in all 50 states and DC
| State | Use-it-or-lose-it | Note |
|---|---|---|
| Alabama Source | No state rule | |
| Alaska Source | No state rule | |
| Arizona Source | No state rule | |
| Arkansas Source | No state rule | |
| California Source | Not allowed | Accrual caps allowed. A general PTO bank counts as vacation. |
| Colorado Source | Not allowed | Accrual caps allowed. Earned vacation can't be forfeited. |
| Connecticut Source | No state rule | |
| Delaware Source | No state rule | |
| District of Columbia Source | No state rule | |
| Florida Source | No state rule | |
| Georgia Source | No state rule | |
| Hawaii Source | No state rule | Vacation policies must be in writing or posted. |
| Idaho Source | No state rule | |
| Illinois Source | Allowed with conditions | Applies to the vacation or general PTO your policy provides. |
| Indiana Source | No state rule | |
| Iowa Source | No state rule | |
| Kansas Source | Allowed | |
| Kentucky Source | No state rule | |
| Louisiana Source | Allowed with conditions | Vacation earned under your policy can't be forfeited when the employee leaves. |
| Maine Source | Allowed with conditions | Payout at exit required for employers with 11+ employees, for vacation accrued since January 1, 2023. |
| Maryland Source | No state rule | No payout only if a written policy limiting it was shared at hiring. |
| Massachusetts Source | Allowed with conditions | |
| Michigan Source | No state rule | |
| Minnesota Source | No state rule | |
| Mississippi Source | No state rule | |
| Missouri Source | No state rule | |
| Montana Source | Not allowed | A combined PTO bank follows your policy. |
| Nebraska Source | No state rule | No statute or state guidance addresses year-end forfeiture, but earned vacation must be paid out at exit, so treat use-it-or-lose-it as high risk. Other paid leave only if agreed. |
| Nevada Source | No state rule | |
| New Hampshire Source | No state rule | |
| New Jersey Source | No state rule | |
| New Mexico Source | No state rule | |
| New York Source | Allowed with conditions | Forfeiture must be in a written or posted policy. |
| North Carolina Source | Allowed with conditions | Forfeiture must be in a written policy given in advance. |
| North Dakota Source | Allowed with conditions | Payout at exit: narrow exceptions need written notice at hiring. |
| Ohio Source | No state rule | |
| Oklahoma Source | No state rule | |
| Oregon Source | No state rule | |
| Pennsylvania Source | No state rule | |
| Rhode Island Source | No state rule | Payout at exit required after 1 year of service. |
| South Carolina Source | No state rule | |
| South Dakota Source | No state rule | |
| Tennessee Source | No state rule | Payout at exit owed only if a written policy promises it. |
| Texas Source | Allowed | Payout at exit owed only if a written policy or agreement promises it. |
| Utah Source | No state rule | |
| Vermont Source | No state rule | |
| Virginia Source | No state rule | |
| Washington Source | No state rule | |
| West Virginia Source | Allowed with conditions | Accrued vacation is part of final pay unless your written policy sets conditions. |
| Wisconsin Source | Allowed with conditions | |
| Wyoming Source | Allowed with conditions | No payout only with a written forfeiture policy the employee acknowledged in writing. |
When an employee leaves, unused PTO may have to be paid out. See PTO payout laws by state or run the numbers in the PTO payout calculator.
Last checked October 2026 against official state labor department and legislature sources. This isn't legal advice; check your state's current law.
PTO rollover rules in other countries (2026)
Outside the US, the law sets a minimum amount of paid annual leave, starting at 2 weeks in Canada and reaching 5 weeks or more in much of Europe. Most countries also set a deadline for taking it, allow carryover only by agreement or for reasons like sickness, or keep unused leave alive until it is taken or paid out.
Canada
Vacation time has a deadline, but the vacation pay is always owed. Federal employers and Ontario give employees 10 months after the vacation year to take it. Quebec, British Columbia and Alberta allow 12 months.
Europe
Carryover windows vary. Germany allows carryover until March 31 for qualifying reasons, the Netherlands until July 1, and Poland until September 30. Sweden lets employees save days above 20 for up to 5 years. In many of these countries, sickness extends the window, and the statutory minimum can't be swapped for cash while someone is employed.
Australia and New Zealand
Leave keeps building up. In Australia, annual leave carries over from year to year with no legal cap, and employers can direct staff to take it only when that's reasonable. In New Zealand, annual holidays stay available until they are taken or paid out.
Mexico and South America
The employer has to grant the leave on time. Mexico allows 6 months after each work anniversary and Brazil 12 months, with double pay if Brazil's deadline is missed. Argentina, Colombia and Chile allow limited banking of leave by agreement.
Middle East
The United Arab Emirates lets employees carry up to half of a year's leave into the next year with employer approval. Saudi Arabia allows postponement into the following year with employer approval. Egypt requires employers to settle unused leave, in time off or pay, at least every 3 years.
Annual leave carryover rules by country
| Country | Minimum paid annual leave | Can unused leave carry over? | Key rule |
|---|---|---|---|
| Canada (federal) Source 1 Source 2 | 2 weeks; 3 after 5 years; 4 after 10 | Postponement by written agreement. | Start within 10 months after earning year; pay remains owed. |
| Canada: Ontario Source | 2 weeks; 3 after 5 years | Complete within 10 months after entitlement year. | Protected leave permits deferral; pay remains owed. |
| Canada: Quebec Source | 2 weeks; 3 after 3 years | Take within 12 months after reference year. | Specified absences or collective rules permit deferral; pay remains owed. |
| Canada: British Columbia Source | 2 weeks; 3 after 5 years | Take within 12 months of earning. | Vacation pay cannot replace time off. |
| Canada: Alberta Source | 2 weeks; 3 after 5 years | Take within 12 months of earning. | Time off required; unpaid vacation pay owed at exit. |
| United Kingdom (Great Britain) Source 1 Source 2 Source 3 | 5.6 weeks, capped at 28 days | Extra 1.6 weeks by agreement for regular hours. | Protected exceptions apply; sickness carryover: 18 months. |
| Ireland Source | 4 working weeks | 6 months after leave year, with employee consent. | Certified illness: 15 months. |
| Germany Source 1 Source 2 Source 3 | 4 weeks | Until March 31 for qualifying reasons. | Employer must enable leave and explain expiry; long illness: 15 months. |
| France Source | 5 weeks | By agreement; sickness: 15 months. | Sickness window starts with employer's notice after return; extensions possible. |
| Spain Source | 30 calendar days | Protected sickness and family leave exceptions. | Ordinary sickness: 18 months after year end. |
| Italy Source | 4 weeks | Two weeks within 18 months after year end. | Two weeks in earning year, unless collective rules differ. |
| Portugal Source | 22 working days | Until April 30 by agreement or for family abroad. | Half the previous year's leave can combine by agreement. |
| Netherlands Source | 4 times weekly hours | Statutory days normally expire July 1 next year. | Inability or written extensions excepted; extra days: 5 years. |
| Belgium Source | 4 weeks, based on previous year's work | 24 months for listed absences, including illness. | Otherwise use in holiday year. |
| Switzerland Source 1 Source 2 | 4 weeks; 5 up to age 20 | Yes, no year-end expiry. | Claims time barred after 5 years. |
| Sweden Source | 25 days; pay depends on earning year | Paid days above 20: 5 years. | Cannot save while using saved days. |
| Denmark Source | 5 weeks, earned monthly | Above 4 weeks by written agreement. | Agree by December 31; qualifying obstacles transfer up to 4 weeks. |
| Norway Source | 25 days including Saturdays; 6 extra from 60 | 12 working days by written agreement. | Illness, parental leave or legal breaches require transfer; pay depends on prior earnings. |
| Poland Source 1 Source 2 | 20 days; 26 after 10 years | Grant by September 30 next year. | No cancellation at deadline; claims: 3 year limit. |
| Australia Source | 4 weeks; qualifying shiftworkers: 5 | Yes, no statutory cap. | National system; casuals excluded. Reasonable directions to take leave permitted. |
| New Zealand Source | 4 weeks after 12 months | Yes, no expiry. | Allow leave within 12 months of entitlement. |
| Mexico Source 1 Source 2 | 12 working days initially; service increases | Grant within 6 months after work anniversary. | Then 1 year to claim; no statutory accumulation rule. |
| Brazil Source | 30 calendar days; absence reductions apply | Grant within 12 months after earning. | Late vacation paid double. |
| Argentina Source | 14 to 35 calendar days by service | One third of previous period, by agreement. | Normally October 1 to April 30; alternative dates by agreement. |
| Colombia Source | 15 working days | 2 years by agreement; specified workers: 4. | Take 6 consecutive working days annually. |
| Chile Source 1 Source 2 Source 3 | 15 working days; regional and service increases | Two consecutive periods by agreement. | Grant oldest before third accrues; no forfeiture. |
| United Arab Emirates Source 1 Source 2 | 30 days after 1 year | Half to next year with employer approval. | Cash allowance possible by agreement. |
| Saudi Arabia Source | 21 days; 30 after 5 years | Next year with employer approval. | Employer delays beyond 90 days need written employee consent. |
| Egypt Source | 15 days initially; 21 from year 2; increases apply | Settle in leave or pay every 3 years. | Take 15 annually, including 6 consecutive. Protected groups cannot postpone. |
Great Britain means England, Scotland and Wales. Minimums vary with service, age and work patterns, and some countries count calendar days while others count working days. Egypt doesn't allow postponement for child workers, people with disabilities and people of short stature.
Rules change. This isn't legal advice. Last checked October 2026 against the official sources linked above.
How to Manage PTO Rollovers
If you think a PTO rollover policy is the right fit for your organization, now you’ll need to decide how you will implement, track, and manage it. As stated above, PTO rollovers do require some additional work to ensure employee balances are accurate. We’ll run through two popular ways to track rollovers and offer you some free resources to help out.
Manage PTO Rollovers in Excel
Spreadsheets are often how most companies start leave tracking before seeking out a more streamlined leave management system. Knowing this, we created a free leave-tracking template to help small teams keep track of their employees’ time off.
Here’s how you can customize it to incorporate your PTO rollover policy:
1. Set Up Rollover Columns
To set the sheet up to track rollovers, users can create a dedicated column in the Yearly Totals tab in the leave tracking spreadsheet for rollover days. This allows you to input the number of days carried forward from the previous year. Edit the formula in the Total Vacation Days tab to be your employees’ yearly allowances plus their rollover days.
2. Align with Your Policy
This template is not a one-size-fits-all type of document. Customize it so it makes sense for your organization.
Here are some examples of ways to make it work for you:
- For a limited rollover policy, use a formula to cap the maximum number of days carried over where the cap reflects your policy limit.
- For unlimited rollovers, simply add unused PTO days to the next year’s quota.
- For a use-it-or-lose-it policy, clear unused days by resetting the column to zero at year-end.
3. Monitor Leave Balances
While Excel is highly customizable, managing PTO rollovers manually can get complicated as your team grows. There are loads of opportunities for manual errors that can cause compliance issues and frustration amongst your team.
Regularly review your spreadsheet to update the days taken and monitor balances. This helps avoid discrepancies and ensures compliance with your policy. Double-check your math and limit the number of people who can edit the document to avoid confusion.
If this sounds too complex or open to inaccuracies, we recommend automation!
Manage PTO Rollovers with a Leave Management System
Vacation Tracker is perfect for teams looking to track their time off with a single click. Our brought-forward feature automatically updates employees' leave quotas with their remaining PTO balances when your leave policy calls for it.
Admins can pick between:
- Disabled Rollover – for when your organization does not roll over any days to the following year.
- Rolling Over All Days – for when you allow users to transfer all unused days from the current year to the next.
- Limited Number of Days – for when you allow users to transfer a limited number of unused days from the current year to the next.
Our software also allows Admins to set expiry dates on brought-forward PTO and calculates these balances automatically. For offices with different rules, see how to manage brought forward leave across multiple locations. This includes the option to activate negative leave balances, where employees carry negative balances into the new year and deduct them from the base quota.
But that’s just the start.
With robust customization capabilities, Vacation Tracker is built to adapt seamlessly to your organization’s unique needs and policies.
Our leave management solution automates the entire PTO tracking process. Eliminate the stress that comes with manual tracking, and watch as Vacation Tracker does it all for you!
Ready to see it in action? Try it free for 14 days!
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Claudia
Claudia is an experienced marketer with a passion for writing and creating engaging content that connects with readers.
