How does terminal leave work?

Terminal leave sounds simple until you're the one planning it. You've saved up leave, you want to use it at the end, and suddenly there are questions about pay, dates and whether you can start a new job. Here's how it usually works.

What terminal leave is

Terminal leave is the accrued leave you take right before your separation or retirement date. Instead of using those days during your career, you use them at the very end, so your last day at work comes before your official last day in the military.

The key thing to know: you're still on active duty the whole time. Your separation date doesn't move. Your terminal leave simply ends on it.

Terminal leave is also meant to be one continuous stretch. It's the last leave you take, it runs straight through to your separation date, and it can't be split into smaller pieces along the way.

Are you paid on terminal leave?

Yes. Because you're still on active duty, your military pay, allowances and benefits keep going through your separation date, just like any other leave. Your health care stays in place until then too. If you're on TRICARE Prime, you stay enrolled in your current plan while you're on terminal leave, and any change in your medical status still gets reported to your transition point of contact and your enrollment site.

That's a big part of why people plan it carefully. A month or two of terminal leave can give you breathing room to move, settle in or start the next thing while your paycheck is still steady.

Terminal leave or selling back leave

You have two ways to use leave you haven't taken: take it as terminal leave, or sell it back when you separate.

Selling back leave pays you for those days at your base pay rate. It doesn't include allowances or special pays, and it's taxed. There's also a career limit of 60 days total that can be sold back, so if you've sold some at a reenlistment, that counts toward the 60.

Taking it as terminal leave keeps your full pay and allowances coming for those days. Selling it back gives you a lump sum, and you keep working until your separation date. Which one makes more sense depends on your situation, and a lot of people do some of each. Your finance office can run the numbers on your actual balance.

Can you start a new job while on terminal leave?

Often, yes. Many people start a civilian job while they're on terminal leave, and the military pay continues until the separation date. That overlap is one of the reasons terminal leave is so popular.

A few things are worth checking first, though. Your branch may have rules about outside employment while you're still on active duty. If you're moving into a job that works closely with the military or a defense contractor, there can be ethics and post-service rules about what you can work on. And federal civilian jobs have their own rules for people on terminal leave. Your command's legal or ethics office is the right place to ask about your specific job.

It's also worth telling a new employer your exact separation date. Some benefits and paperwork, like health insurance start dates, are easier to line up when they know it up front.

How it fits with your other dates

Terminal leave sits at the very end of your timeline, after almost everything else. That's why the order matters.

If you're planning SkillBridge, it usually has to start before terminal leave. Permissive time for house or job hunting is often taken right before terminal leave, too. Your out-processing, final medical appointments and transition requirements generally need to be done before you walk out the door on your last day of work. Your separation physical is a good example. It's meant to be scheduled between 90 and 180 days before your end date, before terminal leave starts, so it's worth putting on the calendar early.

Most commands ask you to submit your terminal leave request well ahead of time, and your leave balance has to be verified before you get a final out date. Starting that conversation early, with your separation date, leave balance and any SkillBridge plans all on the table, keeps the last few months a lot calmer.

Where Loona One fits

Loona One is an AI assistant that works for you through your transition. It keeps your Career Record in one place, including your dates and goals, and it searches jobs and SkillBridge options so you can see what's out there while you plan. It's in private testing, and search coverage is still limited while we test.

Loona works alongside your command, your finance office, TAP and the nonprofits that help service members every day. Your branch's official guidance always has the final word on leave and separation dates.

If you'd like to be one of the first to use it, the Founding 100 is free. You can join the waitlist at loona-one.com.