What Are Pennies Made Out of Now?
Discover the evolving materials and economic factors behind the U.S. penny's physical makeup today.
The U.S. penny has undergone transformations in its material composition since its inception. This evolution reflects adaptation to changing economic realities and fluctuating raw material costs. While the penny’s physical appearance has largely remained consistent, its metallic makeup has shifted over time, from nearly pure copper to its current blend. These changes highlight the U.S. Mint’s considerations in currency production.
Current Penny Composition
Today, the U.S. penny is primarily composed of zinc with a thin outer layer of copper. Pennies minted since 1982 consist of 97.5% zinc and 2.5% copper. This composition was adopted to reduce production costs, contrasting with earlier versions of the coin. Before this change, from 1864 to mid-1982, pennies were predominantly copper, containing 95% copper and 5% zinc, or a mix of tin and zinc. The exception was in 1943, when pennies were made of zinc-coated steel due to copper shortages during World War II.
Reasons for Material Change
The decision to alter the penny’s material was driven by economic factors, primarily the rising cost of copper. By the early 1980s, the market value of copper within the penny approached or exceeded its face value. This created an incentive for individuals to hoard or melt down pennies for their metal content. To mitigate this, the U.S. Treasury authorized a shift to a less expensive material. This change aimed to reduce the production cost per coin and ensure the penny remained a part of the nation’s coinage.
Penny Production and Cost
The current composition significantly impacts the cost of penny production. As of 2024, it costs approximately 3.69 cents to produce and distribute a single penny, nearly four times its face value. This negative difference between production cost and face value, known as negative seigniorage, has been a consistent issue for the U.S. Mint for 19 consecutive years.
While the Mint generates revenue by selling coins at face value to the Federal Reserve, the substantial cost to produce pennies and nickels results in an overall financial loss for these denominations. In 2024, the Treasury incurred a seigniorage loss of $85.3 million from minting over 3 billion new pennies. This ongoing financial burden has led to discussions and proposals regarding the future of the penny in circulation.