Every year, thousands of federal employees forfeit annual leave. The leave does not disappear because people want to work more. It disappears because the leave year ends and the use-or-lose rule applies.
This article breaks down how the rule works, how carryover limits apply, and how smart planning can help you maximize federal annual leave in 2026. From a CFP™ perspective, time off matters. Leave supports your financial picture and your health. Ignore either, and the cost adds up.
Understanding the “Use or Lose” Rule
Federal employees earn annual leave based on years of service. Employees with fewer than 3 years of service earn 4 hours per pay period. Those with three to 15 years earn six hours, plus a bonus in the final pay period. Employees with 15 or more years of service earn 8 hours per pay period.
Most Feds can carry over up to 240 hours of annual leave. Certain groups, including overseas employees and members of the Senior Executive Service, qualify for higher caps.
Here’s the catch: hours above the cap expire at the end of the leave year — not the calendar year. The leave year usually ends in early January. The federal employee annual leave rules do not bend because work stayed busy or plans changed.
Calculating Your Carryover Limit
Start with your most recent Leave and Earnings Statement. Look for your current annual leave balance. Subtract the carryover cap that applies to you. That number tells you how many hours you risk losing.
Many employees wait until fall to check this number. That delay creates problems. Others assume federal holidays extend deadlines. They don’t. The federal employee annual leave rules draw a hard line at the end of the leave year.
If you spot excess hours early, you gain options. If you wait until December, you'll be competing with everyone else for time off.
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Making the Most of Your Leave
Annual leave is paid time. When you do not use it, you lose paid hours at your current salary. That is the tradeoff. No vacation. No payout. The hours simply disappear.
Most forfeitures happen for one reason. The leave never made it onto the calendar. Supervisors approve early time-off requests. Late requests compete with coverage needs and other people’s plans. Employees who treat leave as something to schedule, not something to fit in later, tend to maximize federal annual leave without rushing at the end of the year.
Tips to Avoid Losing Hours in 2026
Mark the end of the leave year on your calendar now. For leave earned in 2026, the leave year ends in early January 2027 under the federal payroll calendar.
If extended trips are not realistic, shorter absences still reduce forfeiture risk. Using single days or long weekends throughout the year steadily draws down excess hours. Combining annual leave with federal holidays can also create longer breaks without using additional leave.
Waiting until December limits options and increases the chance of denial. Planning earlier in the year makes it easier to maximize federal annual leave while maintaining office coverage.
Leave Is Part of the Plan
A little foresight goes a long way. You earned this benefit. Protect it. Use it. Don’t lose it.
When you treat leave as part of a broader financial and life plan, you support long-term security and personal well-being. Serving Those Who Serve works with Feds every day to balance money decisions with quality of life.
If you want help aligning benefits, time off, and long-term goals, reach out to the team at Serving Those Who Serve at [email protected].
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
