Can one use leftover grant funding to take a vacation?
Or does leftover funding get returned to the funding agency?
For reference, I am asking about research labs in American universities.
Without knowing the actual laws or seeing the grant proposal, I think I can pretty definitively say no, you can't do that. If it is noticed, it would likely generate an audit of the entire grant. In an extreme case (NSF funding) it could result in jail time as fraud or embezzlement.
However, if the grant is from some private party, the rules might be very loose, though I doubt it.
However, if the topic of study in the grant were somehow related to leisure time or such then what seems like a vacation might actually be research. (We should all be so lucky.)
What happens with unused funds is likely spelled out in the grant itself or in the regulations of the funding agency. They might go back to that agency, or perhaps remain with some other institution.
But vacations? No. Pizza night for the research team, maybe. Unlikely.
The standard procedure is to extend the grant by a few months, until the money has been spent for purposes that are within the original purpose of the grant. Usually paychecks for people who are writing an additional paper, or grant proposals for a follow-up project (and perhaps take the remaining paid free days from their original contract, if that was what your question aimed at).
Agencies usually have no use for returned money, and would often have to return it to their funding partner(s). Otherwise the agency would have to find someone new to spend the money on, which they don't have resources for.
If the agencies would not simply extend the grant time, that would lead PIs to try to spend the money last minute, possibly by stretching a few rules. They would have to make extra effort to control those last minute expenses. Even if your scientists stay far for stealing the money for a private holiday, legal quabble would often ensue.
But of course, if you don't ask for extension, there will surely be a clause in the grant that says the money falls back to whoever provided it.