Military Leave Benefits at Separation

Updated: December 12, 2020
In this Article

    When you retire or separate from the United States military, you have certain leave benefits open to you that can help ease the transition. If you don’t know all your leave benefit options headed into your final months in uniform, you could miss out on options that can provide extra money, time to search for a new home, and other perks.

    Military Leave Benefits at Separation This information isn’t helpful just for the servicemember; spouses and immediate family members should know about these issues, too. It can help when planning a transition, especially if the veteran is getting out of the military from an overseas location.

    Military Leave Basics

    When serving on active duty, soldiers, sailors, airmen, Marines and Coast Guard troops accrue 2.5 days of leave each month. This leave is accrued even when the veteran is taking leave, which means those who take 30 days or more will actually replace some of their spent leave while away from duty.

    Military leave can be carried over from one month to the next; it is also possible to accrue a maximum of 60 days of unused leave total (carrying a balance from one year to the next) before entering “use or lose” status for leave over 60 days.

    Basically, a service member who carries a 60-day leave balance must use up any excess leave above and beyond those 60 days (the equivalent of going two years without any vacation) before the year that leave was earned in comes to an end.

    Military Leave On Or Before Your Estimated Time To Separation

    Those retiring or separating from military service have options to use or sell their leave. Keeping in mind that in most cases you will be permitted to use or sell leave back to the DoD for up to 60 days maximum for the entire duration of military service, many choose to hang on to some of their leave balances until their final out processing month.

    You read that line above correctly–only sixty days of accrued leave may be sold back in a single military career.

    Taking military leave before you get out of the military is possible in one of two ways–you can simply apply for leave any time ahead of your final out processing appointment and start your “final out” paperwork when you return.

    But service members also have the option of going on “terminal leave” which is basically completing all your outprocessing requirements before your terminal leave begins. Once you go on terminal leave you are (unless the leave paperwork directs otherwise) essentially finished with military duty and do not report again.

    Terminal leave is designed to end on or before your separation date. You cannot use leave to extend your military service beyond the retirement/separation date. If you have a leave balance that exceeds the amount of time you are approved for on terminal leave, you will need to sell that leave back to the DoD, which we will cover below.

    To Sell Or Not To Sell Leave Back?

    Before we cover that topic, there’s an important issue for those who aren’t sure whether they should take terminal leave or sell that leave back to the military. Anyone retiring or separating in an overseas location may wish to think twice about selling leave back.

    You may need that leave under certain circumstances, and keeping the leave instead of selling it may have financial implications to consider.

    For example–if you live in an overseas location where the cost of living is high and you plan to remain there, going on terminal leave makes more sense as you still get all pay and allowances you qualify for while being on leave.

    Selling back the leave does not include such allowances as your housing allowance, subsistence, hazardous duty pay, flight pay, language proficiency pay, etc. As we’ll discover below, selling your leave back to the government nets you the equivalent of X number of days of basic pay and nothing more.

    If you have an expensive relocation ahead, taking the leave could make a lot more financial sense.

    Selling Back Your Military Leave

    As mentioned above, you have the opportunity to sell up to 60 days total (per career) of leave. You can do this instead of going on terminal leave, but you may only have a limited span of time to decide which way to go once the outprocessing journey begins–it helps to know what you want to do before you start filling out your paperwork.

    Selling military leave has financial implications beyond the quick injection of cash selling it back might bring in; for example you only get your basic pay–no housing allowance, no BAS, no clothing allowance, proficiency pay, etc. You will be taxed on the sale of your leave back to the government.

    You would be taxed on this pay regardless, but those who go on terminal leave instead of selling leave back also continue to earn their housing allowance and other authorized payments–military benefits like BAH and BAS are tax-exempt. That’s something to consider when planning your retirement or separation.

    It’s Not Really “Leave”: Permissive TDY

    When a service member is given PCS orders he or she has the option in many cases of requested permissive temporary duty orders to go house hunting. This also applies to those retiring and separating from the military.

    The “P-TDY” option is a valuable one as it allows you to go to your chosen final destination or home of record to search for a place to live while not being charged leave AND while still drawing your pay and benefits. In most cases you may be permitted to apply for as many as 10 days of permissive TDY to go house hunting in connection with a permanent change of station move, retirement, or separation.

    You read that correctly–you still draw pay and benefits while on Permissive TDY orders, the same as going on terminal leave. But having PTDY orders can help you while en route to your house hunting destination as we’ll explore below.

    Permissive TDY is a valuable benefit for those reasons–as you get closer to your final out processing date your remaining time in uniform becomes more valuable in more ways than one. If you use P-TDY as well as terminal leave you could find yourself with a LOT of free time for house hunting, job applications, and other transition appointments while still getting your full pay and benefits.

    Permissive TDY is something you must request through your command support staff and your unit’s current mission requirements and other needs may affect the availability of permissive TDY or the duration of it; in any case you will want to let your supervisor know as soon as possible of your plans and determine what is possible based on your location, your unit, the location where you wish to go house hunting with PTDY orders, etc.

    Permissive TDY doesn’t get you a bump up on Space A flight manifests, but using it to house hunt does have some advantages–you are traveling on official orders and may be able to take advantage of temporary lodging facilities at the bases on the way to your final destination.

    House hunting while on terminal leave doesn’t have the same advantage, and some definitely want to use the comparatively cheaper on-base TLF or other temporary lodging options while searching for a place to live.

    About The AuthorJoe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News

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