Retiring the penny has moved from a perennial policy debate to an actual decision in the United States. In May 2025, the U.S. Treasury announced it would stop producing new one-cent coins once its current blank supply runs out, ending more than 230 years of penny production.
The reason is simple: the coin costs more to make than it is worth. According to the U.S. Mint's 2024 annual report, each penny cost roughly 3.7 cents to produce and distribute — nearly four times its face value. Most consumers are unsure what this means for their wallets: Will prices get rounded up? Do pennies stay legal tender?
Will banks still accept them? This guide answers all of it — covering why the penny is being retired, how cash rounding will work, what other countries learned from dropping their smallest coins, and what you should do with the pennies in your jar.
Why the U.S. Is Retiring the Penny
The government loses money on every single penny it makes. The U.S. Mint's annual reports have shown for years that the cost of producing a one-cent coin — covering zinc, copper plating, manufacturing, and shipping — exceeds its face value, sitting near 3.7 cents in recent reports.
That gap, called seigniorage loss, adds up to hundreds of millions of dollars annually.
In May 2025, Treasury officials confirmed the phase-out, stating that the final penny blanks had been ordered and production would wind down as supply depleted. The U.S. Mint's own filings make the math plain: no coin in circulation costs more to manufacture than the penny. Retiring the penny is ultimately a cost-cutting measure that has been debated for decades.
It is not just the minting cost, either. Businesses spend time and labor counting, transporting, and managing one-cent coins that many customers leave in jars or refuse at all.
How to apply this: Check the U.S. Mint's official production cost reports if you want to track the exact figures yourself — they publish the per-coin cost every year.
How Cash Rounding Will Work After the Penny
Here is the biggest practical question: when pennies disappear, what happens at the register? The answer, based on how other countries handled it, is symmetric rounding — cash totals are rounded to the nearest five cents, sometimes up and sometimes down.
A total of $9.98 rounds down to $9.95. A total of $10.02 rounds down too. Only totals ending in 3, 4, 6, or 7 cents round up. Over many transactions, studies of rounding in other countries consistently show the wins and losses roughly balance out — consumers do not systematically pay more.
Retiring the penny does not mean every transaction automatically rounds upward.
Card and electronic payments are unaffected. They will continue to settle to the exact cent.
The key thing to understand is that rounding applies only to the final cash total, not to individual item prices or taxes. Your receipt still shows exact amounts.
How to apply this: If you pay cash regularly, review your receipts during the transition and confirm your total was rounded to the nearest nickel — not automatically upward.
What Other Countries Learned From Dropping Their Smallest Coins
The United States is not breaking new ground. Several major economies eliminated their lowest-value coins, and their experiences offer a preview of what to expect when retiring the penny.
| Country | Year dropped | Smallest coin kept | Cash rounding rule | Action to learn from |
|---|---|---|---|---|
| Australia | 1992 | 5 cents | Nearest 5 cents | Prices stayed stable |
| New Zealand | 2006 | 10 cents | Nearest 10 cents | No measurable inflation |
| Canada | 2013 | 5 cents | Nearest 5 cents | Charities collect coins |
| Sweden | 2010 | 1 krona | Phased naturally | Digital payments grew |
Canada is the most instructive case. The Bank of Canada notes the Royal Canadian Mint officially discontinued the one-cent coin in 2013, with businesses instructed to round cash transactions to the nearest five cent increment. Canadian government reviews found no significant inflation effect from the change. Retiring the penny in Canada proved smoother than many critics predicted.
One wrinkle Canada discovered: many consumers simply kept using their existing pennies, so the coins remain legal tender and circulate less each year.
How to apply this: Watch for charity penny drives — in Canada, organizations collected hundreds of millions of retired pennies, a model U.S. nonprofits are likely to copy.
Do Your Pennies Stay Legal Tender? Your Money Questions Answered
Yes. Retiring the penny stops production of new coins, but existing pennies remain legal tender indefinitely. You can spend them, deposit them at banks, and exchange them at face value.
Three key points:
- Banks must still accept them. Existing pennies retain their face value of one cent, and depository institutions will continue processing them.
- Coin-counting machines keep working. Services like Coinstar operate thousands of kiosks in U.S. grocery stores and convert pennies to cash or e-gift cards, typically for a fee on cash payouts.
- Collectors may pay a premium. Certain dates and mint marks — notably some Lincoln wheat cents — carry collector value well above face value.
This is the same pattern Canada followed: the coin disappeared from registers long before it disappeared from circulation. Retiring the penny affects manufacturing, not the legal status of coins already in circulation.
How to apply this: Sort your coin jar before cashing in. Anything dated 1958 or earlier is a wheat cent worth checking against a coin value guide before you trade it for face value.
What Retiring the Penny Means for Prices, Businesses, and Budgeting
Businesses face the biggest adjustment. Retailers must train staff on rounding rules, adjust point-of-sale systems to round cash totals, and manage inventory of nickels, which some economists predict will become the new low-coin workhorse.
Inflation fears are the most common concern, but the evidence is reassuring. The U.S. Government Accountability Office has examined penny elimination multiple times, and international experience — from Canada to New Zealand — consistently found rounding effects too small to detect in overall price indices.
Most transactions today are already cashless: Federal Reserve payments studies show electronic payments dominate U.S. transaction volume, and those never require rounding. Retiring the penny is unlikely to move the needle on inflation.
As Treasury put it in its May 2025 announcement, the decision reflects the reality that the penny's production cost had simply become untenable.
How to apply this: If you run a small business, contact your point-of-sale provider now and ask whether a cash-rounding setting is available for when penny supplies run dry.
Frequently Asked Questions About retiring the penny
When did the U.S. Mint stop making pennies?
The Treasury announced the phase-out in May 2025, with production ending once the final order of blanks was struck. No new pennies enter circulation after that point, though billions remain in commerce. If you find a penny in change, retiring the penny has not affected its spending power at all — it is still worth exactly one cent.
Will prices go up because of rounding?
Evidence says no, at least not meaningfully. Rounding is symmetric — some totals go up, some go down. After Canada's transition, analyses found no detectable inflation linked to rounding.
One exception: a single small cash purchase could round up a few cents, but card payments are never rounded, so retiring the penny mainly affects rare cash transactions ending in 3, 4, 6, or 7 cents.
Are old pennies worth more than face value?
Most are worth exactly one cent, but collectors pay premiums for specific dates and conditions. Pre-1958 wheat cents, certain key dates like the 1909-S VDB, and error coins can be worth dollars to hundreds of dollars.
Before cashing in, retiring the penny has made many Americans check their change more closely — a quick look at a coin grading reference is worth the effort.
Can I still deposit pennies at my bank?
Yes. Banks continue to accept and count pennies at full face value. Some branches may prefer rolled coins for large amounts, and policies vary by institution, so call ahead for big deposits. Retiring the penny changes manufacturing only — it does not change any bank's obligation to honor existing coins at face value.
Why keep the nickel but eliminate the penny?
The nickel is also produced at a loss — the Mint's reports show it costs more than five cents to make — but it serves more transaction roles, and eliminating a mid-value coin would create a larger rounding gap. Policymakers addressed the penny first because its loss is largest per coin.
Retiring the penny may eventually renew debate about the nickel's economics too.
Conclusion: Your Penny Action Plan
The end of the one-cent coin is a practical change, not a financial threat. Keep these takeaways in mind:
- Existing pennies stay legal tender — spend, deposit, or exchange them freely
- Cash rounding is symmetric, so wins and losses balance out over time
- Card payments are untouched by rounding rules entirely
- Check old coins first — some wheat cents carry real collector value
Countries like Canada made this transition smoothly years ago, and the U.S. is following a well-tested playbook. Take one step today: empty that coin jar, sort out anything dated 1958 or earlier, and deposit or exchange the rest. Retiring the penny may end production, but your cents still count.
