Should You Sell Back Leave or Take Terminal Leave When You Get Out?

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You have decided to get out of the military but when you look at your LES you notice you have 60 days of leave on the books. You have 3 options:

  1. You can take the leave between now and your separation date
  2. You can sell back your leave when you get out
  3. You can take terminal or separation leave.

What should you do?

Taking Regular Leave

This is the worst idea of the three. Sure it is nice to take leave to ease the stress, visit family, or go on vacation; but when you are due to separate from the military it is better to use that leave in other ways, let's discuss them.

Selling Back Leave

Did you know that when you get out of the military you can sell back any unused leave?

Military members are authorized to get a cash payment for any unused leave when they separate from the military if they are retiring or separating with an honorable discharge.

You are authorized 1/30 of your basic pay for each day of leave you sell back. Depending on your paygrade and dependent status you may be authorized payment for a portion of your Basic Allowance for Subsistence (BAS), and a portion of your Basic Allowance for Housing (BAH) as well.

Members are entitled to sell back a maximum of 60 days leave during their career, you can sell back leave any time you reenlist, extend an enlistment, or when you are discharged.

Taxes are withheld from your final payment at the rate of 25% for federal tax and varying amounts for state tax, depending on your personal situation, on the basic pay portion alone.

For example: an E-6 with 8 years service gets basic pay of $3,303 a month, this equals $110.10 a day. If they sell back the maximum of 60 days leave they would get the following:

  • $6,606 Basic Pay (subject to taxes) net $4,954.50
  • $42.00 BAS ($0.70 a day)
  • $75.00 BAH ($1.25 a day)

Total payment of $5,071.50

Taking Terminal Leave

You can also take what is known as terminal or separation leave when you are being discharged.

Terminal leave is just like regular leave except that you aren't required to report back to your duty station, you can basically move back home and get paid, knowing you don't have to go back to work.

Let's take a look at the same E-6 with 8 year service we discussed above, and compare what the pay will be, lets's assume he is stationed at Kitsap Navy Base - Bremerton, WA:

  • $6,606 Basic Pay (subject to taxes) net $4,954.50
  • $736.58 BAS ($368.29 a month times 2)
  • $3,234 BAH ($1,617 a month times 2)

Total Payment of $8,925.08

So you see that terminal leave definitely pays you a lot more, but is it the better deal?

Which Is Better?

Well, ultimately that is all up to you and your personal situation. The general rule of thumb is if you have a job waiting on the outside it may be better to sell back your leave, if you don't it may be better to take terminal leave.

Let's look at examples, say you are due to get out on September 1.

  • If you sell back your leave you remain on active duty until September 1. You continue to work and draw a military paycheck for July and August, then when you get out you get a $5,000 check and start drawing a civilian check.
  • If you take terminal leave you will start leave July 1, draw your regular military pay for 2 months and on September 1, all the money stops. But, during July and August you can be looking for work while you are getting paid. Hopefully in 2 months you will have either found a job or will maybe be using your GI Bill to go to school, and have money coming in.

So you see, it can seem complicated, but with a little planning and thought you can choose the option that is best for you.

 

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