How Much Does It Cost to Make a Penny?

The cost of producing a penny often sparks public curiosity, as it can exceed its face value. This expense is determined by materials, manufacturing processes, and historical shifts.

The Current Cost of a Penny

The U.S. Mint reports on the costs of producing circulating coins. For fiscal year 2024, each Lincoln cent cost 3.69 cents to produce, an increase from 3.07 cents in 2023 and 2.72 cents in 2022. The cost to produce a penny has significantly exceeded its one-cent face value for many years.

This disparity means the U.S. government incurs a loss on each penny minted. This situation, where the production cost of a coin is higher than its face value, is called negative seigniorage. The unit costs for pennies and nickels have remained above their face value for 19 consecutive fiscal years. Despite these losses, the Mint continues production, with overall seigniorage (profit from coinage) for all denominations still contributing to the Treasury General Fund.

Factors Influencing Production Cost

The cost of manufacturing a penny is influenced by raw materials. The modern penny is primarily composed of zinc (97.5%) with a thin coating of copper (2.5%). Fluctuations in the market prices of these metals, particularly zinc and copper, directly impact the material cost.

Beyond raw materials, the manufacturing process contributes to the expense. This includes energy consumed by machinery during steps like blanking, plating the zinc core with copper, and striking the design. Labor costs for personnel involved in production, quality control, and distribution also factor into the total. Overhead expenses of the U.S. Mint, such as facility maintenance and administrative costs, are allocated across total coin production, adding to the per-unit cost.

Historical Context of Penny Production

The composition of the U.S. penny has undergone several changes throughout its history, driven by economic considerations and material availability. When the U.S. Mint was established in 1792, the penny was made of pure copper. This composition remained largely consistent until 1857, when its metallic content shifted to 88% copper and 12% nickel.

Further changes included a move to 95% copper and 5% tin and zinc in 1864. In 1943, during World War II, pennies were temporarily made of zinc-coated steel to conserve copper. The most impactful change for current costs came in 1982. Due to rising copper prices, the U.S. Treasury authorized a switch to the current copper-plated zinc core, which drastically reduced the amount of copper needed for each coin. These shifts illustrate how the penny’s manufacturing expense has evolved with market conditions.