Are Pennies Being Discontinued? What to Know
Get the facts on whether the penny is being discontinued, the debate surrounding its future, and how transactions might change.
For decades, the humble penny has been a constant presence in American wallets and coin jars, yet its future has become a frequent topic of discussion. Public curiosity often centers on whether the one-cent coin will remain a part of daily commerce. This ongoing debate reflects evolving economic realities and consumer habits. Understanding these perspectives is key to grasping its role in the broader financial landscape.
Current Status of the Penny
The U.S. Treasury Department recently announced plans to halt the production of new pennies, with this change expected to begin in 2026. This decision comes after years of the U.S. Mint incurring significant losses on the coin’s production. For example, in 2024, it cost approximately 3.7 cents to produce a single penny, resulting in a net loss of $85.3 million for the year.
Despite the halt in new production, existing pennies will remain legal tender and continue to circulate. The Treasury’s action addresses the financial inefficiency of minting coins that cost more to produce than their face value. While the Treasury can cease production, only Congress holds the authority to formally eliminate a coin from circulation.
Arguments for and Against Keeping the Penny
The debate surrounding the penny involves economic and social considerations. A primary argument for discontinuing the penny is the substantial financial loss incurred by the government due to its production costs. Each penny costs more than its value to mint, impacting taxpayer funds. Beyond production, the minimal purchasing power of a single cent means it often accumulates in jars or is discarded, contributing to inefficiency in transactions.
Conversely, those advocating for the penny’s retention highlight its perceived role in keeping consumer prices stable. They argue that eliminating the penny could lead to businesses consistently rounding cash transaction totals upward, potentially disproportionately affecting individuals who rely on cash, particularly those with lower incomes. Pennies also play a role in charitable giving, with many organizations benefiting from “penny drives” and small change donations.
Understanding Rounding Practices
If the penny were to be fully phased out, cash transactions would adapt through established rounding practices. This involves “cash rounding,” where the final total of a cash payment is adjusted to the nearest five or ten cents. For instance, a cash total of $4.92 might round down to $4.90, while $4.93 might round up to $4.95. This rounding only applies to the total amount of a cash purchase, not to the prices of individual items.
Digital payment methods, such as credit cards, debit cards, and mobile payments, would remain unaffected by any rounding rules. These transactions process exact amounts to the cent, ensuring precision regardless of physical currency changes. Experiences in other countries that have eliminated their lowest-denomination coins, like Canada and Australia, suggest that rounding up and down tends to balance out for consumers over time. While sales tax calculations would still result in amounts with cents, the ultimate cash payment would be rounded to the nearest nickel.