When you're setting up paid time off for the first time — or revisiting a number you picked years ago — the question is deceptively simple: how many days? Offer too little and you lose candidates to competitors before the interview ends. Offer too much and you're carrying a cost (and a payout liability) you didn't model. The good news is that there's a well-defined market range, and your job is to position within it deliberately rather than guess. This guide gives you the 2026 benchmarks by company size, tenure, and industry, then walks through how to turn a benchmark into an actual policy.
The short answer
For most US small businesses, a competitive starting point in 2026 is 10–15 paid vacation days for new full-time employees, rising to 15–20 days with tenure. Smaller companies (under 100 employees) often start closer to 8–10 days; larger and tech-sector employers start at 15–20. There is no federal requirement to offer paid vacation — the number is yours to set, within the market range below.
Benchmark by Company Size
The single biggest predictor of how much PTO a company offers is its size. Larger employers offer more, both because they can absorb the cost and because they compete for the same talent as other large firms. If you're a small business, the most relevant comparison is the top rows of this table — not the Fortune 500 number.
| Company Size | Typical Vacation Days (new hires) |
|---|---|
| 1–99 employees | 8–10 days |
| 100–499 employees | 10–12 days |
| 500+ employees | 13–15 days |
| Fortune 500 | 15–20 days |
If you're a startup or small business trying to punch above your weight on benefits, PTO is one of the cheapest levers you have. Moving from 10 to 15 days costs you roughly five days of productivity per employee per year, but it lets you advertise a number that matches a company several times your size — a strong recruiting signal for candidates who weigh benefits alongside salary.
Benchmark by Years of Service
Most employers don't offer a flat number — they scale PTO with tenure. This is the most cost-effective structure available, because it rewards the employees you most want to keep while holding down the cost of short-tenure hires who are statistically the most likely to leave early. Here's the national average by years of service:
| Tenure | Avg. Vacation Days | Equivalent Hours |
|---|---|---|
| Less than 1 year | 8 days | 64 hours |
| 1 year | 11 days | 88 hours |
| 3 years | 13 days | 104 hours |
| 5 years | 15 days | 120 hours |
| 10 years | 17 days | 136 hours |
| 15 years | 18 days | 144 hours |
| 20+ years | 20 days | 160 hours |
These are private-sector averages; government and public-sector roles typically run higher (often 13–26 days depending on tenure). For the full breakdown — including how these averages are measured — see our companion data guide on how many vacation days Americans get.
Benchmark by Industry
Your industry sets expectations as much as your size does. A software engineer expects a very different PTO offer than a retail associate, and benchmarking against the wrong industry will leave you either uncompetitive or overspending. The 2026 ranges:
| Industry | Typical PTO Range | Notes |
|---|---|---|
| Technology | 15–20 days | Many offer unlimited PTO |
| Finance & Banking | 15 days | Often more with tenure |
| Legal & Professional Services | 14–18 days | Higher at larger firms |
| Nonprofits | 14–16 days | Sometimes offset lower salaries |
| Healthcare | 12–15 days | Often a combined PTO bank |
| Manufacturing | 10–12 days | Often tied to union contracts |
| Retail & Food Service | 6–8 days | Part-time often ineligible |
How to Turn a Benchmark Into a Tier Structure
Once you've picked a starting number, build the tenure ladder around it. A clean, common structure for a small business looks like this:
- Entry level (0–2 years): 10–15 days
- Mid tenure (3–5 years): 15–18 days
- Senior (5+ years): 18–25 days
Set the jumps at milestones employees can see coming — a bump at the 1-year, 3-year, and 5-year marks reads as a reward and a retention nudge. Keep the increments modest (2–3 days per tier); the goal is a visible reward, not a runaway cost. Once you've chosen the numbers, you'll need an accrual rate to put them on a paycheck basis — our PTO accrual rate guide has the formulas (for example, 15 days a year is about 4.62 hours per bi-weekly paycheck).
Don't Forget Sick Leave and Legal Minimums
The benchmarks above are for vacation. Depending on where your employees work, you may also be legally required to provide paid sick leave on top of whatever vacation you offer — 20 jurisdictions now mandate it, with their own accrual and carryover rules. This changes the "how much" math: in a mandate state, a 12-day combined PTO bank may not actually satisfy the sick-leave requirement.
What About Unlimited PTO?
Unlimited (or "open") PTO is tempting for small businesses: no accrual tracking, no carryover headaches, and no payout liability at separation since there's no accrued balance to pay. It also reads well in a job posting. But the data complicates the picture — workers at companies with unlimited PTO take an average of 13 days per year, fewer than the 15 days taken by workers with a defined allotment. Without a number to anchor to, employees default to taking what their peers take, which is often less.
For most small businesses, unlimited PTO works only with a deliberate culture of encouraging time off — managers modeling it, minimums where needed. And it doesn't exempt you from mandatory paid sick leave, which still has to be tracked separately in mandate states. If you can't commit to actively pushing people to use it, a generous defined policy usually serves employees better.
What PTO Actually Costs You
To set the number with eyes open, model the cost on two axes. The productivity cost is roughly one day of wages per PTO day taken — real, but partly offset by the retention and recruiting value, since candidates often weigh PTO as heavily as a modest salary bump. The liability cost applies in states that treat accrued vacation as wages (California, Colorado, Illinois, Massachusetts, Nebraska): unused balances become a dollar obligation you carry on the books and must pay out at separation. Generous carryover compounds that liability; a reasonable carryover cap controls it. When an employee does leave, the PTO Payout Calculator estimates the accrued amount owed.
Putting It All Together
Setting your PTO number comes down to four moves: benchmark against your size and industry (not the Fortune 500), build a modest tenure ladder on top of your starting figure, clear the legal floor for sick leave and payout in every state you operate in, and pick a tracking method that keeps the cost predictable. Get those four right and you'll land on a number that competes for talent without quietly becoming a liability.
Turn Your Number Into a Policy
You've got the benchmark — now make it official. The free PTO Policy Generator builds a clean, customizable policy around your day count, accrual, carryover, and payout rules.
Use the Free PTO Policy Generator →Frequently Asked Questions
How much PTO should a small business offer?
Most US small businesses offer 8–15 vacation days per year for entry-level employees — companies under 100 employees cluster at 8–10, mid-size at 10–12. A competitive 2026 starting point for most small businesses is 10–15 days for new full-time hires, rising with tenure. There's no federal requirement to offer paid vacation, so your number is driven by industry, location, and what you need to attract talent.
What is a standard PTO policy?
A standard policy offers a set number of paid days that increase with tenure — commonly 10–15 days for new hires, rising to 15–20 after five years. Many employers use a combined PTO bank for vacation and personal time, with separate sick leave where state law requires it, plus a defined accrual method, carryover rule, and payout policy at separation.
Is unlimited PTO a good idea for a small business?
It can reduce tracking and eliminate payout liability, but employees with unlimited PTO often take fewer days (about 13 vs. 15) because they're unsure what's acceptable. It works as a recruiting signal only with a culture that actively encourages time off — and it doesn't exempt you from mandatory paid sick leave laws.
How many PTO days do most companies give?
Across US private-sector employers, full-time workers get about 11 vacation days after one year, ~15 after five years, and 20 after twenty. Larger employers offer more: 500+ employee firms average 13–15 days and Fortune 500 firms 15–20, while companies under 100 employees average 8–10.
Should PTO increase with tenure?
Tenure tiers are the most common structure and a cost-effective retention tool. A typical ladder is 10–15 days at entry level, 15–18 at three to five years, and 18–20+ for senior staff. Tiers reward loyalty without raising your cost for short-tenure employees, who are most likely to leave before the higher accrual kicks in.
Does offering more PTO cost more?
Yes, but less than salary. Each PTO day is roughly one day's wages in productivity cost, plus a potential payout liability in states that treat accrued vacation as wages. Because candidates often value PTO as highly as a modest raise, adding days can be a more cost-effective way to stay competitive than increasing pay — provided you track accruals and carryover to control the liability.