Terminal Leave
vs. Sell-Back
Most calculators say terminal leave always wins because they count your military pay on one side only. It is paid either way. This compares what actually differs — and tells you plainly when selling is the better deal.
Enter your numbers.
After this sale you have 0 career days left to sell.
Selling pays $6,331.50 more
Without a civilian job lined up, terminal leave adds time but no money. Selling converts those days to cash while you keep drawing the same military pay you would get either way.
For the 60 days in question: basic pay $9,000.00 · BAH $0.00 · BAS $0.00. Identical under both options — not counted below.
The 22% taken from a lump sum is a flat withholding rate, not the tax you actually owe. When you file, the lump sum is taxed with the rest of your income at your real rates, and anything over-withheld comes back as a refund. Someone in the 12% bracket who has 22% withheld will usually get a large chunk of it back — so do not reject selling just because the withholding line looks painful.
At 2.5 days a month, 60 days of terminal leave earns about 5 more days, so it runs roughly 65.5 calendar days. Use that when you set your leave start date. Leave accrues under both options, so it does not change which one pays more.
What the dollar figure leaves out
The cash difference is often smaller than the value of the time. Neither column is the right answer by default.
| Factor | Terminal leave | Selling the leave |
|---|---|---|
| Time | Weeks of paid time to job hunt, house hunt, execute a move, handle medical appointments, and decompress before starting over. | You work those days in uniform and get cash instead. |
| Job search | Interviews, relocation trips and start dates are far easier to schedule when you are not also reporting for duty. | Job searching has to fit around a full duty day. |
| Cash timing | No lump sum. Income arrives as normal pay and, if applicable, civilian pay. | A single lump sum in final pay — useful for a move, a deposit, or a cash buffer. |
| Career cap | Taking leave does not consume any of your 60-day career sell limit, so it stays available for a future separation. | Permanently consumes days from the 60-day career limit. |
| Risk | A civilian start date can slip. If the job falls through, you have spent the leave and have no lump sum. | The cash is certain once final pay settles. |
| Leave accrual | Leave keeps accruing while you are on terminal leave, so a 60-day balance stretches to roughly 65 days — you can start leave a few days earlier. | Leave also accrues while you work those days. Anything left at separation is settled in final pay if you have career days left, or lost if you do not. |
What the law and regulations actually say
You may sell no more than 60 days in a career
The limit is cumulative across your whole career, counting every prior sale since 9 February 1976 — not 60 days per separation. Days already sold at a reenlistment reduce what is left.
37 U.S.C. § 501 ↗Sell-back is computed on basic pay only
Leave is "valued using only basic pay". BAH, BAS, and special pays are not part of the lump sum. This is not a penalty for selling — you still receive your allowances normally through your separation date either way.
DoD FMR Volume 7A, Chapter 35 (Separation Payments), March 2024 ↗A federal civilian job during terminal leave is expressly authorized
A member on terminal leave pending honorable separation "may accept a civilian office or position in the Government of the United States ... and he is entitled to receive the pay of that office or position in addition to pay and allowances from the uniformed service for the unexpired portion of the terminal leave."
5 U.S.C. § 5534a ↗Private-sector work still needs approval, and ethics rules still apply
You remain on active duty until your separation date. Outside employment generally requires approval through your chain of command, and conflict-of-interest and post-government employment restrictions apply — particularly if the employer is a defense contractor.
DoD 5500.07-R, Joint Ethics Regulation, 15 May 2024 ↗Leave keeps accruing while you are on terminal leave
You accrue 2.5 days per month of active service, and terminal leave is active service — roughly 5 extra days over a 60-day terminal leave. Plan your leave start date around it. It accrues under both options, so it changes how long terminal leave lasts rather than which option pays more.
10 U.S.C. § 701 ↗Use it or lose it
Leave you can neither sell (because of the career limit) nor take before your separation date is forfeited. If the career cap blocks a sale, the only way to get value from those days is to take them.
DoD FMR Volume 7A, Chapter 35 (Separation Payments), March 2024 ↗Take this to your finance office
A one-page summary of your numbers, both options, and the rules that apply — to check against your leave balance and final pay estimate.
This is a planning estimate
Your actual leave settlement is computed by DFAS from your records at separation. Your final LES and separation paperwork are authoritative — confirm your leave balance and prior days sold with your finance office before you decide.
Tax figures are estimates using flat rates. Your real liability depends on your full year's income, filing status, and state of legal residence. Combat zone tax exclusion leave is not modeled. This is not tax, legal, or financial advice.
Working a civilian job on terminal leave requires meeting the ethics and approval rules above. Talk to your ethics counselor before accepting an offer from a defense contractor.
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