Guide

How to find and reclaim unused Microsoft 365 licenses

PUBLISHED 1 NOVEMBER 2026 · ABOUT 5 MINUTES

Licenses are usually the largest line in a Microsoft 365 bill, and some of them are paid for and not used by anyone. This guide covers where the waste comes from and how to find it safely.

Where license waste comes from

Leavers. Accounts that were disabled or blocked but still hold a license.
Inactive users. Active accounts with a paid license and no activity in months.
Lapsing trials and renewals. Trials that end, or subscriptions that renew at a seat count you no longer need.

Step 1: disabled accounts that still hold licenses

These are the safest to reclaim: the person cannot sign in, so nobody loses access. List disabled accounts and check which still have licenses assigned. Before you remove one, remember what removing a license does: it starts Microsoft’s grace period (about 30 days) for that account’s mailbox and OneDrive, after which the data can be deleted. If the mailbox must be kept, convert it to a shared mailbox first.

Also check how the license is assigned. If it comes from a group, removing it directly will not work: remove the person from that group instead.

Step 2: licensed users with no activity

Microsoft’s usage reports (Exchange, OneDrive, SharePoint, Teams and others) show when each user last did something. Choose a period, such as 30, 60 or 90 days, and list licensed users with no activity in it.

The report data is usually one to two days behind.
If names show up as long codes, or nobody matches, your tenant is hiding user names in reports. In the Microsoft 365 admin center, go to Settings, then Org settings, then Services, then Reports, and untick the option to display concealed user, group and site names. It takes effect within a day.

No activity does not always mean not needed. Shared mailboxes, service accounts and people on long leave all look inactive. Treat the list as a set of questions to ask managers, not a list to remove.

Step 3: watch what renews and what ends

Keep a list of every subscription with its next renewal or end date, whether it is a trial, and how many seats are used. Look for trials about to lapse (users lose access), subscriptions in a grace period or suspended, and seat counts well above use. Microsoft does not tell apps whether auto-renew is on, so for any subscription that matters, check billing in the Microsoft 365 admin center.

A routine that works

Monthly: reclaim licenses from disabled accounts.
Quarterly: review the 90-day inactive list with managers.
Before every renewal: compare seats purchased with seats used.

Doing this in the toolkit. Orphaned Licenses lists disabled accounts that still hold licenses and removes them one at a time with a confirmation. Unused Licenses lists licensed users with no activity over 30, 60 or 90 days and only reads. Subscription Watch lists every subscription with its renewal or end date, soonest first. See how August 365 Toolkit works. It is still pre-release, and every tile's help page lists exactly what it changes and what it cannot undo.