this post was submitted on 27 Jul 2024
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[–] [email protected] 4 points 4 months ago (2 children)

Aside from this, at least in my state, if you opt to cash out your vacation days without taking them, they get taxed at a higher rate. I used to tell my teams, "If you take your vacation days instead cashing them out, you get more money after taxes and you don't have to be here, so please just take your vacation time."

[–] IsThisAnAI 6 points 4 months ago

Not how taxes work. You get the money back at tax time unless you are in the top bracket.

[–] [email protected] 3 points 4 months ago

I'm pretty sure they just get withheld at a higher rate.

It's the same amount of money, and the tax rate is calculated on total income (with a bunch of bullshit to make it more complicated for minimal reasons), but getting paid for unused vacation days means that you got a much higher total amount of cash that week, and so bonus checks have more money taken out for taxes because projecting that week's checks out to a year at $2000 instead of $1500 would put you in a different tax bracket.

But at the end of the year it's just your total income used to calculate the actual amount owed, so your number would be the same. (Ignoring that it's progressive and you earned 40 more hours worth of money). So most of the time that difference in withholding is basically just a bigger refund or less owed.