When Will Pennies Officially Stop Being Made?

The United States penny, the nation’s lowest denomination coin, has been the subject of considerable public and governmental discussion regarding its continued production. Its relevance and economic viability are increasingly questioned, leading to ongoing debates about its future.

The Penny’s Production Cost and Value

The primary economic argument for discontinuing the penny centers on its disproportionate production cost compared to its face value. In 2024, it cost the U.S. Mint approximately 3.69 cents to produce and distribute a single penny, nearly four times its worth. This financial inefficiency resulted in a seigniorage loss of $85.3 million for the Treasury in 2024, incurred from minting over 3 billion new pennies. Pennies produced since 1982 consist of 97.5% zinc and a thin coating of 2.5% copper. The rising costs of these raw materials contribute significantly to the manufacturing expense, highlighting the economic burden of maintaining penny production.

Historical Significance and Changing Utility

The penny holds a significant place in American currency history, with the first U.S. cent produced in 1787. Its metallic composition has evolved over time, settling on the current copper-plated zinc. Despite its historical presence, inflation has substantially eroded the penny’s purchasing power over decades. A penny in 1909, for instance, could buy items like a loaf of bread or a bottle of milk, which now cost significantly more. This decline in value has rendered the penny largely impractical for everyday purchases, often ending up in jars or discarded, with most modern vending machines no longer accepting them.

Current Discussions on Discontinuation

Discussions surrounding the penny’s discontinuation have been ongoing within the U.S. government and society for many years. Numerous legislative efforts have been introduced in Congress since 1990, including proposals to round cash transactions to the nearest nickel, although none have been enacted into law. These debates often highlight arguments about cost savings and increased transaction efficiency versus concerns over potential rounding impacts and effects on low-income individuals.

In May 2025, the U.S. Treasury Department announced plans to cease penny production starting in 2026. This decision is primarily driven by the coin’s high production costs and declining practical use. While new production will halt, existing pennies will remain legal tender and continue to circulate, gradually diminishing in availability as they fall out of use.

Rounding Practices in a Penny-Free Economy

Should the penny be formally discontinued, cash transactions would likely adopt a rounding method often referred to as “Swedish rounding” or “cash rounding.” This practice involves adjusting the total amount of a cash payment to the nearest five-cent increment. For example, if a purchase totals $1.23 or $1.24, the cash payment would be rounded down to $1.20. Conversely, a total of $1.26 or $1.27 would be rounded up to $1.30. This rounding would apply only to cash transactions. Electronic payments, such as those made with credit or debit cards, would remain unaffected and continue to be processed to the exact cent. This method is common in other countries that have phased out their lowest-denomination coins, demonstrating a practical approach to managing currency shifts.