Military terminal leave, also referred to as “transitional leave,” is a final privilege you earn with military service.
Terminal leave is designed to provide military personnel with time away prior to discharge.
As a result, service members often utilize the time to relax, secure housing, and/or find civilian employment.
However, military personnel also have the option of selling back their transitional leave for extra money.
Consequently, determining whether to use or sell your terminal leave varies depending on personal circumstances.
Learn more about the 6 things you need to know about military terminal leave.
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Table of Contents
#1. Understand Terminal Leave
Terminal leave, also known as transitional or accumulated leave, is the time you are granted away from service just prior to discharge.
The amount of terminal leave you receive is equal to the total amount of unused leave accumulated during active service.
Terminal leave enables service members to receive regular pay and military benefits without the need to report back to the duty station.
In fact, military personnel complete out-processing and turn in gear prior to departing for transitional leave.
There are different strategies as to how you should use your leave (if, at all).
Some troops elect to save the maximum allotment for terminal leave for a smoother transition back into civilian life.
Meanwhile, others attempt to financially capitalize on their accrued hours by selling them back to the Department of Defense for extra cash.
Types of Military Leave
The U.S. Armed Forces provides all service members with military leave as part of the benefits package.
Thus, National Guard and Reservists also receive transitional leave in addition to members of the 6 major branches.
Military personnel generally earn 30 days per year, which you can use on the following types of military leave:
- Emergency Leave
- Ordinary Leave
- Terminal Leave
Personnel may use Ordinary Leave and Emergency Leave at any time during service (pending commander approval, of course).
However, terminal leave is reserved for time before the expiration — term of service (ETS).
The ETS is listed on your service agreement, which is the date you are free to leave the military.
You’ll still need to receive approval from a commanding official before being granted transitional leave.
Terminal Leave Max Allotment
In the past, the max limit for hours you could use for terminal leave was 60 days.
However, that has recently changed due to the COVID-19 pandemic.
Recently, the U.S. Department of Defense (DoD) announced that authorized service members may now accrue and retain up to 120 days.
It’s worth mentioning that this special allotment is only granted to personnel that served between March 11 – September 30, 2020. You will also need to satisfy other conditions under this policy.
Calculating Terminal Leave
Transitional leave is accrued just like any other type of paid leave.
Therefore, service members earn 2.5 days of leave per month.
When you do the math, that is 30 days of leave for a year of service.
As a result, you can calculate terminal leave to determine how many hours you have remaining.
Furthermore, this will allow you to calculate how much money you’ll receive for selling terminal leave back to the military.
Currently, terminal leave is valued at 1/30th of base pay per day you have accrued.
It’s also important to note that taxes (25% for federal) are withheld on the final payment.
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#2. Terminal Leave: Use or Sell?
Military service is extremely strenuous, demanding, and stressful.
For this reason, it never hurts to take a break during the transition from a military career to a civilian career.
It’s precisely why terminal leave is granted to service members.
However, that doesn’t mean you are restricted to using the time.
In fact, service members have the option of using terminal leave or selling the time for more income:
Keep Terminal Leave
The biggest motivation for keeping your terminal leave is that you deserve it.
Military life is not easy, and you could use a break before transitioning into the civilian world.
Furthermore, using terminal leave can give you a much-needed head start.
Service members still earn basic pay and other allowances while on terminal pay.
Thus, your regular income with the military is not disturbed, allowing you to still receive Basic Allowance Housing (BAH) and other benefits.
Currently, the Department of Defense allows personnel to designate up to 2 months (60 days) toward terminal leave.
The only exception is for authorized personnel who served during the COVID-19 pandemic in 2020.
Sell Terminal Leave
The other argument with terminal leave is to sell the hours for extra cash.
Of course, this option presents you with more money in your pocket.
Unfortunately, you will not get the same amount of time to decompose and prepare for life after the military.
However, it will provide you with the means to pay off debt and other expenses.
The DoD repays terminal leave at 1/30th of your basic pay rate for each day you have accumulated.
Moreover, taxes are withheld from the final payment at 25% for federal (and varies for state taxes).
Additionally, service members cannot sell back more than 60 days of leave.
Please keep in mind the option to sell back transitional leave is only available to personnel who are honorably discharged.
#3. Personal Time & Future Planning
If you decide to keep your terminal leave, then make sure to take advantage of it prior to ETS.
Service members are generally free to use their leave at any point during service.
Regardless, storing 1 to 2 months of leave for the end of service makes the transition back into civilian life smoother.
Thus, maintain the notion that terminal leave is for finishing projects (and preparing for new ones), not ignoring them.
Using terminal leave allows you to still take advantage of military benefits (more information, below).
As a result, you can still earn basic pay and receive full benefits while hunting for a new job and home.
Transitional leave is especially valued by service members with dependents.
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#4. Secure Future Housing
There is a huge advantage to using terminal leave for house hunting.
The housing market has become ultra-competitive, making it difficult for families to find affordable housing.
The issue is especially problematic for service members with a significant other and/or children.
Consequently, use this time to secure housing after you leave the military.
Finding your next home officially begins a new chapter in your life and leads the way to finding employment.
In the past, you may have relied on the military housing allowance (BAH) to pay the bills.
Fortunately, there are other services available to veterans that assist in finding affordable housing.
The average time to find and buy a new home is 1 to 2 months, so make sure to plan accordingly.
#5. Prepare for Civilian Career
Once you secure housing it’s time to focus on a career.
During service, you have a job specialty that served as your military career.
Now, you have the option of continuing down the same path or transitioning into a new career.
There are many rewarding careers that will provide you with a larger salary than what you may have earned with the military.
So, don’t be afraid to highlight your achievements with the military both in the resume and during job interviews.
Future career planning should begin well before terminal leave, and this time will present you with the opportunity to secure employment.
Moreover, there is always the option of returning to school where you can utilize tuition assistance set aside for military veterans.
Often, service members find this the most difficult task with returning/adjusting to civilian life.
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#6. Maximize Military Benefits
The advantages to keeping your terminal leave and using the time (as opposed to selling it) are the benefits.
When you sell transitional leave, you also lose the benefits at the date of ETS.
However, when you keep terminal leave, you also receive full benefits until the time expires.
So, you can take up to 2 months off prior to discharge while still earning full pay and benefits.
It also includes continued membership to TRICARE Prime and other services.
Meanwhile, military dependents also receive assistance with their transition.
MySTeP is a transitional program designed to assist military spouses and dependents in getting off military allowances and benefits.
Conclusion
Military personnel earn leave while serving in the Armed Forces.
Terminal leave is specifically reserved for when you are preparing to finish service.
The Department of Defense (DoD) grants up to 60 days for terminal leave.
Accordingly, you can utilize this time to relax, secure housing, or find employment.
Often, using transitional leave is the best method for transitioning from military to civilian life.
Be that as it may, service members have a second option of selling their terminal leave.
Selling back transitional leave will provide you with a larger final payday from Uncle Sam.
However, you also most likely be taxed on this income at a higher rate than you’re accustomed to, and you’ll lose all military benefits at the same time.
Meanwhile, keeping terminal leave enables service members (and dependents) to continue and receive full benefits until ETS.
Born and raised in Woodbridge, NJ, he graduated from the New Jersey Institute Of Technology with an MBA in eCommerce.His hobbies include beach volleyball, target shooting, and lifting.
Rob is also a Commercially rated pilot and Certified Flight Instructor (CFI), with over 1,500 hours of flight time.
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