Is the Penny Discontinued? The Current Status Explained

The U.S. penny has been a subject of ongoing discussion. While it has not been formally discontinued as legal tender, the U.S. Treasury Department announced in May 2025 its intention to halt the production of new pennies starting in 2026. This decision marks a significant shift for the smallest denomination coin, a part of American currency for over two centuries. Despite this upcoming change in production, existing pennies will remain valid for transactions and continue to circulate.

Current Status of the Penny

The U.S. penny maintains its status as legal tender for all debts, both public and private. Even after the cessation of production in early 2026, all existing pennies will retain their monetary value and can still be used in transactions or deposited at financial institutions. However, the availability of pennies will gradually decline as no new coins are minted and those in circulation are lost or damaged. This will eventually lead to a shift in cash transactions, where many businesses are expected to implement rounding to the nearest five-cent increment. Electronic payments, such as debit or credit card transactions, will not be affected and will continue to reflect exact cent amounts.

Historical Debates and Proposals

Discussions surrounding the penny’s utility and cost have been present for decades, often centering on its low purchasing power, the time consumed in handling it, and the rising cost of production. For instance, in 2024, the cost to produce a single penny was approximately 3.69 cents, leading to an annual loss of over $86 million for taxpayers. Concerns about the environmental impact of mining the zinc and copper used in pennies have also been raised. Past legislative efforts, such as the Price Rounding Act of 1989 and the Legal Tender Modernization Act of 2001, aimed to cease penny production and introduce rounding to the nearest nickel for cash transactions, though none were enacted. In 2025, President Trump instructed the Treasury Secretary to stop minting new pennies, citing the wasteful spending associated with their production.

Penny Production and Circulation

The U.S. Mint has been responsible for manufacturing pennies, which have undergone several composition changes. Since 1982, pennies have primarily consisted of 97.5% zinc with a thin copper plating of 2.5%, a change implemented to reduce production costs as copper prices rose; before 1982, pennies were predominantly copper. In 2024, the U.S. Mint produced approximately 3.22 billion pennies, representing the largest proportion of all circulating coins minted. This volume was less than half of previous years, indicating a decreasing trend in production even before the recent announcement. The decision to cease production in early 2026 effectively ends the manufacturing process for new one-cent coins, despite the high production cost exceeding its face value for 19 consecutive years and pennies often accumulating in homes rather than actively circulating.

International Experiences with Low-Denomination Coins

The United States is not alone in reevaluating the role of its lowest-denomination coinage, as several countries have already phased out their equivalents of the penny. These international precedents demonstrate that discontinuing low-denomination coins is a global trend driven by economic efficiency and changing transaction habits.

• Canada ceased production of its one-cent coin in May 2012. Canadian pennies remain legal tender, but cash transactions are now rounded to the nearest five cents.
• Australia withdrew its one-cent and two-cent coins from circulation in 1992 due to inflation and high minting costs.
• New Zealand eliminated its one-cent and two-cent coins in 1990, followed by the five-cent coin in 2006, as these denominations had lost their practical value due to inflation.
• Some Eurozone countries, including Finland, Ireland, and the Netherlands, have also stopped issuing one-cent and two-cent euro coins, opting for rounding rules in cash transactions.