Is the U.S. Penny Going Extinct? What You Need to Know
Explore the ongoing debate about the U.S. penny's future. Understand the costs, arguments, and implications of its potential elimination.
The United States penny, a one-cent coin, has long been a constant in daily commerce, yet its continued existence is increasingly debated. This discussion encompasses economic realities and practical considerations. Examining the arguments surrounding the penny’s future reveals its financial implications, societal impact, and historical precedent.
The Current Debate on Penny Elimination
Discussions surrounding the elimination of the U.S. penny are active, with proposals emerging in Congress. In 2025, bipartisan legislation was introduced aiming to end penny production. This effort followed a directive from the former President to the Treasury Secretary to cease minting new pennies, citing waste. While a presidential order can halt production, only Congress possesses the authority to officially eliminate a denomination from legal tender.
The Cost of Keeping the Penny
The economic realities of producing the U.S. penny drive the debate. In 2024, the U.S. Mint reported it cost 3.69 cents to produce a single penny, costing more than its face value. This inefficiency has persisted for 19 consecutive years. In fiscal year 2023, penny production resulted in over $179 million in costs to taxpayers, highlighting a substantial financial burden on the U.S. Mint.
Arguments for Elimination and Concerns Against It
Proponents of eliminating the penny emphasize its diminished purchasing power and inefficiencies in daily transactions. Its value has significantly eroded, with purchasing power declining more than 30-fold between 1900 and 2022. This low value often leads to people neglecting pennies or leaving them at cash registers. Handling pennies also consumes time at the point of sale. Environmentally, penny production involves mining zinc and copper, which contributes to carbon dioxide emissions, pollutants, and energy consumption.
Conversely, those who advocate for keeping the penny raise concerns about potential negative impacts. A primary apprehension is a “rounding tax,” where cash transactions would be rounded up to the nearest five cents, potentially disproportionately affecting low-income individuals who rely more on cash payments. While electronic transactions remain unaffected, rounding cash purchases could lead to a slight increase in consumer costs. There is also a sentimental attachment to the penny, which features Abraham Lincoln, and some argue that charities depend on small coin donations. Additionally, eliminating the penny would necessitate increased production of nickels, which also cost more than their face value to produce (13.78 cents in 2024), potentially shifting the financial burden rather than eliminating it.
How Other Nations Have Handled Low-Value Coins
Many countries have already addressed low-value coinage, offering precedents for the United States. Canada phased out its penny in 2012, allowing existing coins to remain legal tender but encouraging merchants to round cash transactions. Australia removed its one- and two-cent coins from circulation in 1992 due to inflation and rising production costs. New Zealand similarly eliminated its one- and two-cent coins in 1990, later discontinuing its five-cent coin in 2006.
Several European nations, including Finland, Ireland, and the Netherlands, have also stopped issuing one- and two-cent euro coins, opting for rounding rules in cash transactions. These international experiences indicate that economies adapt to the absence of small coins without significant disruption. Phasing out low-denomination coins often reflects a global trend towards reducing the economic and environmental costs associated with their production.
What Penny Elimination Would Mean for Transactions
If the penny were eliminated, the most direct impact would involve cash transactions. Prices would be rounded to the nearest five-cent increment. This system, often called “Swedish Rounding,” rounds amounts ending in one, two, six, or seven cents down to the nearest five or zero. Amounts ending in three, four, eight, or nine cents would be rounded up.
Electronic transactions, including those made with debit or credit cards, would remain unaffected, processed for the exact amount. Businesses would need to update their point-of-sale systems for cash rounding rules. The transition is anticipated to be manageable, as demonstrated by other countries that have adopted similar policies.