Are They Getting Rid of Pennies? An Official Update

The penny, a long-standing part of American currency, faces ongoing discussion about its future. Many wonder if the United States plans to eliminate this one-cent coin. Its relevance and cost have led to public curiosity about its potential discontinuation. This article explores the debate surrounding the U.S. penny.

Current Status of the Penny

The United States penny remains legal tender, with no active legislative or executive plans for its abolition. While debates and proposals frequently arise, no official action has been taken to phase out the coin. The penny continues to be minted and circulated as part of the nation’s currency.

It is still used in everyday transactions. Despite recurring discussions about its utility and cost, the U.S. Mint continues its production. Therefore, speculation about its immediate removal from circulation is not supported by current policy.

Arguments for Discontinuing the Penny

A primary argument for discontinuing the penny centers on its production cost, which consistently exceeds its face value. In 2024, it cost the U.S. Mint approximately 3.69 cents to produce and distribute a single penny. This inefficiency has persisted for 19 years, prompting calls for its elimination to save taxpayer money.

Inflation has eroded the penny’s purchasing power, making it less useful in modern transactions. What a penny could buy decades ago now costs substantially more. This diminished value means pennies are often not used in transactions or are discarded, accumulating in jars rather than circulating.

Economic inefficiency extends to the time spent by consumers and businesses handling pennies. Counting, making change, and transporting these low-value coins adds up to considerable time and effort, representing economic waste. This handling can slow down transactions and create operational burdens for retailers.

Production of pennies has environmental implications. Pennies are primarily made of zinc (97.5%) with a copper plating (2.5%). Mining and refining these metals consume resources and energy. The process can also contribute to pollution through the release of substances like sulfur dioxide and heavy metals.

Arguments for Retaining the Penny

Concerns about eliminating the penny often revolve around its impact on pricing and transaction rounding. Critics argue removing the penny would lead retailers to round up prices to the nearest nickel, potentially increasing consumer costs. This “rounding tax” could disproportionately affect lower-income individuals who rely more on cash transactions.

The penny also plays a role in charitable giving, with many organizations relying on coin drives and small donations. Programs like “take a penny, leave a penny” trays and coin collection initiatives contribute to various causes. While digital micro-donations are growing, the physical penny still facilitates a traditional form of philanthropy.

Tradition and sentiment also factor into arguments for keeping the penny. The coin has a long history in American society, with Abraham Lincoln’s image gracing it for over a century. For many, the penny holds a nostalgic or symbolic value that transcends its monetary worth.

Finally, transitional costs for businesses are a consideration. Eliminating the penny would require adjustments to cash registers, pricing systems, and accounting practices. While one-time costs, they could present an initial burden for businesses, especially smaller ones.

How Currency Decisions are Made

Decisions regarding U.S. currency, including denomination elimination, involve a multi-faceted governmental and legislative process. The U.S. Treasury Department manages the nation’s finances and oversees coin and currency production through the U.S. Mint. The Mint manufactures coins for circulation based on demand and economic viability.

Any significant change to denominations in circulation, such as discontinuing the penny, ultimately requires legislative action. Congress holds the constitutional power to coin money and regulate its value. Therefore, a bill must pass both the House and Senate, then be signed into law by the President, for the penny to be phased out.

This process ensures decisions are subject to public debate, economic analysis, and political consideration. While the Treasury and Mint provide data and recommendations, Congress retains the authority to enact changes to the nation’s coinage system.

International Precedents for Low Denomination Coins

Numerous countries worldwide have faced similar debates or eliminated their lowest denomination coins. Canada, for instance, phased out its penny in 2012 due to high production costs and low utility. Cash transactions in Canada are now typically rounded to the nearest five cents.

Australia removed its 1- and 2-cent coins from circulation in 1992, citing inflation and rising production costs. New Zealand followed a similar path, eliminating 1- and 2-cent coins in 1990 and later discontinuing the 5-cent coin in 2006. These countries generally experienced minimal disruption, with rounding rules implemented for cash transactions.

Several European nations, including Finland, Ireland, and the Netherlands, stopped issuing 1- and 2-cent euro coins, opting for rounding rules in cash transactions. This global trend demonstrates that such currency changes are not unprecedented and can be managed effectively.