Terminal Leave vs. Selling Leave Back: The 2026 Payout Math
You are within sight of your ETS date with a pile of unused leave, and one question: take it as terminal leave, or sell it back? Most forum answers stop at "terminal leave is better." Sometimes it is. But the two options pay you in completely different ways, and the gap is bigger than most people realize because of one line item: BAH.
The two options, in one table
| Terminal leave | Sell-back | |
|---|---|---|
| You receive | Base pay + BAH + BAS + full benefits | Base pay only |
| Medical coverage | Active-duty TRICARE continues | Ends at ETS |
| Career cap | Uses leave days | 60-day lifetime cap |
| Start next job? | Not while on terminal leave | Cash in hand, free to work |
How each payout is calculated
Terminal leave pays exactly like a normal day on active duty. Your daily rate is base pay divided by 30, plus your daily BAH and BAS on top.
Sell-back pays only your daily base pay rate, computed as months of service × 30 ÷ 360. No BAH. No BAS. No allowances of any kind. And it is capped at 60 days over your entire career, including anything you sold at a previous reenlistment.
Worked example: E-5 with 9 years and 60 days of leave
Take an E-5 with 9 years of service in a high-cost area:
| Item | Monthly | Daily |
|---|---|---|
| Base pay (E-5, over 8) | ~$3,950 | ~$131.67 |
| BAH with dependents (example: $2,400) | $2,400 | $80.00 |
| BAS | ~$460 | ~$15.33 |
| Total value per day | ~$227 |
Terminal leave: 60 days × ~$227 ≈ $13,620 (before taxes), with full medical coverage throughout.
Sell-back: 60 days × ~$131.67 ≈ $7,900 (before taxes), and you lose the days from your terminal leave option entirely.
In this example terminal leave pays roughly $5,700 more for the same 60 days. The exact gap depends on your BAH: in a low-cost duty station with barracks housing it shrinks dramatically, and for a single junior enlisted member in the barracks the two options get much closer.
When selling back actually wins
- You already have a start date. You cannot work a civilian job while on terminal leave. If your new employer wants you in two weeks, sell-back turns leave into immediate cash with no waiting.
- You are in the barracks or low BAH. Without a large BAH component, terminal leave's advantage narrows to almost nothing.
- You will need leave later. The 60-day sell-back cap and 120-day terminal leave rules interact across a career. Some members deliberately sell days at one separation knowing they will take terminal leave at retirement.
- Your command will not release you. Terminal leave requires approval. If your unit needs you until the last day, sell-back is the fallback, not the first choice.
Helpful tool
Run your own numbers before you decide: our leave calculator shows how much leave you will have banked by your ETS date, and our pay calculator breaks down base pay, BAH, and BAS so you can price a day of terminal leave against a day of sell-back with your real entitlements. For the full separation picture, see our leave calculator guide.
A simple decision rule
If your BAH is large and your next job can wait: take terminal leave. If your BAH is small, your start date is fixed, or you need liquidity now: sell back only what you must, and terminal-leave the rest. Most veterans in high-cost areas are better off taking every day of terminal leave they are approved for, because allowances are where the real money hides.
Bottom line
Terminal leave pays you base pay plus everything; sell-back pays you base pay only. Price your own BAH into the decision, check your career caps, and run both scenarios before you sign the leave form. Five minutes of math is worth thousands of dollars here.
Frequently asked questions
How is military leave sell-back calculated?
Leave sell-back is paid at your daily base pay rate only: months of service x 30 divided by 360. You do not receive BAH, BAS, or any other allowance on sold leave days, and payouts are capped at 60 days over an entire career.
Do you get BAH on terminal leave?
Yes. On terminal leave you remain on active duty and receive your full entitlements: base pay, BAH, BAS, and full medical benefits. This is why terminal leave is usually worth significantly more per day than selling the same leave back.
Is terminal leave taxed the same as regular pay?
Yes, terminal leave pay is taxed like any other active-duty pay. Sell-back is also taxed as ordinary income. The key difference is not taxes but allowances: terminal leave days include BAH and BAS, while sell-back days pay base pay only.
What is the 120-day leave rule before ETS?
Terminal leave generally must be taken during the last months before your separation date and cannot push your ETS date back. Most branches require command approval, and leave sold back at separation is limited to the days you did not use.
When does selling leave back make more sense than terminal leave?
Sell-back can make sense when you have already signed a job offer, need income during a gap, cannot be released from duties early, or when selling a few days now preserves your career cap of 120 days for a future terminal leave or retirement. Run both numbers with your actual base pay before deciding.
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Related guides: Military leave calculator guide • PCS move timeline • DD-214 explained