What your unused leave is actually worth when you separate or retire
Sell-back pays base pay only. When you sell leave, each day pays your monthly basic pay divided by 30, and nothing else. No BAH, no BAS, no special pays. Then it is taxed as supplemental wages: a flat 22% federal withholding, plus state and FICA. What looked like a nice lump sum shrinks by nearly a third before it hits your account.
Terminal leave keeps everything. Because you stay on active duty through your DD-214 date, taking leave pays your full compensation: base pay plus BAH plus BAS, with TRICARE still active. The allowances are tax-free, so the same day of leave is worth more taken than sold, by roughly the value of your housing and subsistence allowances. For someone with a $2,100 BAH, that is about $85 a day of tax-free money that selling simply throws away.
The 60-day cap only limits selling. You can sell a lifetime maximum of 60 days across your whole career, and any leave you sold at a past reenlistment counts against it. Terminal leave has no cap. If you separate with 90 days on the books, you can take all 90 as terminal leave but sell only 60, so the excess is worth nothing unless you use it.
The double-dip makes it lopsided. Starting a civilian job during terminal leave is generally allowed, and it means you collect military pay and a civilian paycheck for the same days. That is the single biggest reason to take leave rather than sell it: for those weeks you are paid twice. Nobody who sells leave gets that.
The honest exception is cash flow. If you physically cannot take the leave before your separation date, or you need the lump sum in hand immediately, selling is better than forfeiting. But when you can take it, terminal leave wins for nearly everyone. This tool reads 2026 base pay from the same tables as our Compensation Calculator and applies the tax treatment to each side honestly.
Take it, in almost every case. Terminal leave keeps base pay plus tax-free BAH and BAS while you transition; sell-back pays base only and is taxed at 22% plus state and FICA. The difference is roughly the value of the allowances you keep. Start a civilian job during terminal leave and you are paid twice for the same days.
A lifetime maximum of 60 days across your whole career. Leave you sold at a past reenlistment counts against it. Terminal leave has no cap, so with more than 60 days you can take everything but sell only 60.
As supplemental wages: a flat 22% federal withholding, plus state tax and FICA. Withholding is not your final bill; you reconcile at tax time. The base-pay portion of terminal leave is taxed the same, but the BAH and BAS on terminal leave are not taxed at all.
No. Your DD-214 date stays put. You are simply on leave, still on active duty, right up to that date, which is why all your pay, allowances, and TRICARE continue.
Generally yes, and it is the strongest argument for taking leave over selling it. You remain on active duty and paid, while also earning a civilian salary. Check your service and any post-government-employment rules if you are heading into a federal or defense-contractor role, but for most civilian jobs it is fine.
Leave is one line of it. Your final pay may also include prorated base pay and allowances, a clothing allowance, and any bonus recoupment if you separate before an obligation ends. Model the full compensation picture with our Compensation Calculator.
All data on this page comes from official government sources. Verify independently:
📎 Military Leave and How It Works (Military OneSource)📎 DoD FMR Volume 7A (Pay & Leave)📎 Special Leave Accrual (DFAS)📍 This is an estimate. For official numbers, talk to your installation's free financial resources:
Find Your Installation's Finance Office & Transition Counselors →Search for your base → Personal Financial Management or the Transition Assistance Program (TAP). All services are free and confidential.