Selling leave in the military is an important benefit of service.
It allows service members to get compensated for any unused time off.
Often, selling leave is a way to earn some additional money prior to discharge.
As a result, find out 6 things you need to know about selling leave in the military.
Related Article – Military Terminal Leave: 6 Things You Need To Know
Selling Leave in the Military
There are various types of leave in the military.
In general, service members are allowed to sell back unused time off prior to discharge.
However, the decision to use or sell leave is an important consideration.
There are many advantages, as well as a few disadvantages (more information, below) selling leave in the military.
For example, some military personnel elect to use the time off for relaxation or securing housing and employment.
Meanwhile, others find it more beneficial selling leave in the military.
Doing so, puts extra money back into the pockets of service members but also features a few stipulations.
In general, using or selling military leave is a matter of personal preference and may revolve around needs or circumstances.
Therefore, if you are considering selling leave in the military, there are several things you should know beforehand.
Types of Military Leave
There are several types of leave in the military:
- Regular Military Leave
- Emergency Leave
- Convalescent Leave
- Terminal Leave
Terminal leave, also known as transitional or accumulated leave, is available just prior to discharge.
The paid time off represents all the unused leave accumulated during active service.
It grants military personnel critical time off to make arrangements for after leaving service.
However, service members also have the option of selling military leave instead of using it.
For this reason, here are 6 things you should know if you are thinking about selling leave in the military:
#1. How much leave do you receive?
Terminal leave allows service members to receive regular pay and military benefits without having to report to the duty station.
In general, military personnel earn 30 days per year which they can use on any type of military leave.
The amount service members accumulate over their time in the military continues to collect until the expired – terms of service (ETS) date.
Nevertheless, military personnel are only allowed to carry over a maximum of 60 days from one fiscal year to the next.
It’s worth mentioning, however, that some of these guidelines have changed especially in the aftermath of the COVID pandemic.
During that time period many service members were not authorized to take time off.
Accordingly, the Department of Defense (DoD) has expanded the amount of unused leave certain military personnel may possess, increasing to 120 days.
Terminal leave is available to service members in all branches of the military along with National Guard and Reserve components.
Military personnel may request leave at any time yet may want to use discretion and save toward the conclusion of service.
In many circumstances, military personnel should consider selling leave in the military to capitalize financially.
#2. What should you do with military leave?
Let’s say your Dave, and Dave has less than a month remaining on his service contract before he reaches ETS.
Dave is conflicted over using his terminal leave as an opportunity to secure employment and housing, or sell it back for money.
Dave notices that he has the maximum allocated time remaining – 60 days – and essentially has 2 options:
- Use the terminal leave as PTO.
- Sell back the military leave.
What should Dave do?
In many situations, it depends on personal circumstances.
For example, if the service member is stressing over finding affordable housing or landing the next job, time off may be necessary.
In other situations, it makes far more sense selling military leave because the extra income is substantial.
Be that as it may, service members should be mindful when making a final decision that there are a few guidelines.
For starters, individuals cannot carry more than 60 days total, meaning that’s the maximum payout.
Additionally, there are 2 choices for selling leave in the military: 1) during reenlistment / extension, or 2) when separating from the military.
Related Article – Reenlistment Codes For Each Military Branch
#3. How much do you earn selling military leave?
Did you know that you can earn money back by selling military leave?
It’s true, but only one option when determining what is best to do with terminal leave.
Often, service members have a couple different opportunities to sell back leave.
First, when they reenlist for service.
Secondly, when a service member separates from the military permanently.
Regardless of the situation, personnel are allowed to sell back a maximum of 60 days.
In general, military leave is sold back at the base pay rate.
Unfortunately, the benefit does not include any special pay or allowances when calculating a final payment.
Furthermore, selling leave in the military is only authorized for those separating from service with an honorable discharge.
Service members earn 1/30th of their basic pay for each day they sell back.
In other words, an E-5 Sergeant in the military typically receives $2,614 per month in basic pay.
Let’s say that same Sergeant decides to sell back his military leave – How much does he receive?
First, it depends on the number of days of military leave remaining (maximum 60 days).
Then, input the following calculation: [Days of Remaining Military Leave] x 1/30 Basic Pay = Amount of Payout
For example, the Sergeant would receive selling leave in the military:
- 30 Days = $2,614
- 60 Days = $5,228
Please keep in mind that selling back military leave is taxable (25% for federal).
Therefore, check with the pay office to determine a tax withholding rate and how that might impact the entitlement.
#4. What are the advantages of selling military leave?
The decision to use or sell terminal leave is entirely up to you.
As previously mentioned, the payouts for selling military leave are substantial.
Nevertheless, there are some pros to using leave instead of selling it back to the military.
Often, the final decision is made based on financial circumstances.
Of course, everyone would like to use paid time off but there may be more of an argument for selling back to earn additional money.
Those that do not have immediate plans for work, or have already found civilian employment may have no purpose for using terminal leave.
It’s especially true in situations where housing is also secured.
Thus, the additional income from selling military leave can go toward many things.
In many situations, selling leave allows service members to pay off debt or have more money for groceries.
Furthermore, the bonus can be used as a gift, like putting a down payment on a new car or house.
Those that earn money for selling back military leave often profit more than double during the final months of service.
It’s because the earnings are immediately paid back (following tax deductions) while personnel continue to receive regular pay.
Or, you can wait until the separation date to cash out and earn the bonus following retirement.
Ultimately, the choice is yours, so make sure to spend some time and effort thinking about what’s best given the personal circumstances.
#5. What are the disadvantages to selling military leave?
It’s not always wise to sell back leave.
There are many different strategies to managing military benefits, including terminal leave.
Accordingly, despite the lucrative opportunity of cashing in, some feel it’s best to use terminal leave rather than lose it.
Of course, there is nothing that can replace time off, especially when preserving special moments with family and friends.
Therefore, using the time off to unwind and relax may be exactly what a service member needs before returning to the civilian world for good.
Moreover, you may be assigned to a unit that is deploying soon or have kids in school.
In these scenarios, it might make more sense for military personnel to use the time off.
After all, the military reserves this time to assist with the transition of finding housing and employment.
Therefore, using terminal leave is more likely to grant service members with a smooth transition back into civilian life.
Furthermore, it’s important to note that once an individual sells back leave, they also lose certain other benefits.
Consequently, special duty pay and other incentives may cease to exist.
You’ll no longer receive Basic Allowance for Subsistence (BAS) and Basic Allowance for Housing (BAH) assistance, as well.
More importantly, health care and insurance may be threatened, so make sure to ponder all options.
In the end, the biggest argument for using military leave is that service members deserve it.
#6. What if you want to use and sell military leave?
The good news is that in certain military units there is an option to use some of the leave while selling back other days.
Often, service members take as much terminal leave as the unit allows while selling back any remaining allocation.
Therefore, if the service member has 60 days of terminal leave they may want to consider taking a month off while earning extra pay for the additional 30 days.
It’s always wise to take into account how selling military leave influences taxes, since the government does take a large chunk of each payout.
The choice is ultimately yours, or at least in theory.
Please keep in mind that certain situations or military units may force individuals to take terminal leave, or remain on duty until expiration term of service (ETS).
In the latter scenario, the service member will be at least allowed to still sell back their leave.
Related Article – How To Get A Copy Of Your DD 214: 5 Fastest Ways
There are various strategies for using leave, if, at all.
Often, in many situations, it’s more beneficial to sell back leave if the unit allows it.
Service members can receive a significant payout for selling military leave.
As a result, it’s very important to consider all the options – along with pros and cons – of selling or using military leave.
Often, the best advice is if you already have a civilian job and housing, sell back the leave.
Otherwise, it may be best to take the terminal leave and enjoy some much needed time off from service.
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