When Is the Penny Going Away? The Official Phase-Out Plan
Understand the official status of the U.S. penny's future. Get clarity on its current standing and the ongoing discussions about its discontinuation.
The future of the United States penny frequently sparks public discussions and debates. Many individuals wonder about the continued relevance of the one-cent coin in modern commerce, prompting questions about its official status and potential phase-out plans.
The Penny’s Current Standing
The Treasury Department has announced plans to cease manufacturing the penny, with the U.S. Mint placing its final order for penny blanks. This decision signals an intent to stop putting new pennies into circulation by early 2026, once the existing supply is exhausted. The increasing cost of production is a primary reason for discontinuing its minting.
Despite plans to halt production, the official elimination of the penny as legal tender requires specific legislative action. Historically, various legislative efforts to remove the penny from circulation have not been successful. While new pennies will eventually no longer be minted, existing coins will remain legal tender, and their use in transactions will continue until supplies diminish significantly.
Factors Influencing Penny Discussions
A primary argument for discontinuing the penny is its production cost, which consistently exceeds its face value. The cost to produce a single penny rose from 3.07 cents in 2023 to 3.69 cents in 2024, reaching nearly 4 cents by 2025. This means the government incurs a financial loss on every penny manufactured, a situation that has persisted for 19 consecutive years.
The declining purchasing power of the penny also fuels arguments for its discontinuation. What a penny could buy decades ago now requires substantially more currency. For example, one penny in 1913 held the purchasing power equivalent to about 32 cents today, illustrating a significant erosion of its value due to inflation. This diminished value contributes to logistical inefficiencies, as pennies are often considered too insignificant for many transactions, frequently collected in jars, or discarded. The time spent handling low-value coins at points of sale is also a frequently cited concern.
Considerations for Retaining the Penny
Despite the arguments for its discontinuation, several factors support the penny’s continued presence in circulation. One significant consideration is the potential impact of rounding on consumer prices for cash transactions. If the penny were eliminated, cash payments would likely be rounded to the nearest five cents, a practice that some contend could act as an unstated “rounding tax.” This potential rounding up, rather than down, could disproportionately affect low-income individuals who rely more heavily on cash for everyday purchases.
The penny also plays a role in charitable giving, with numerous organizations benefiting from “penny drives” and similar fundraising initiatives. People are often more inclined to donate pennies, perceiving them as having little individual value, yet collectively these small contributions can accumulate into substantial funds for various causes. The penny carries a symbolic and sentimental value for many Americans, partly due to its long history and the depiction of Abraham Lincoln. Concerns also exist that eliminating the penny could increase the demand for nickels, which similarly cost more than their face value to produce, with a unit cost of 13.78 cents in 2024.