The Treasury unveils its plan to kill the penny
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The Treasury unveils its plan to kill the penny
The US Treasury is phasing out production of the penny and will soon stop putting new one-cent coins into circulation. Consumers with pennies will still be able to use them for purchases. But businesses that complete cash transactions will have to start rounding up or down to the nearest nickel. The move is not a surprise. President Donald Trump said in February that he ordered the US Mint to stop making pennies, citing the cost of the coin, which costs more than three cents each to produce. The Mint tried to cut those losses by making far fewer nickels — only 202 million, down 86% from the 1.4 billionNickels it minted in each of the previous two years. But that would cost $78 million more than any savings from the pennies it stopped producing. It did estimate an immediate savings to taxpayers of $56 million from the halt of penny production. But the idea of dropping the penny is supported by others, including some merchants. The United States wouldn’t be the first to dump its least valuable coin entirely.
The US Treasury is phasing out production of the penny and will soon stop putting new one-cent coins into circulation, the department said in a statement Thursday.
The news of the decision was first reported by the Wall Street Journal Thursday.
A Treasury spokesperson said the government made its final order of penny blanks this month, and the United States Mint will continue to manufacture pennies only as long as an inventory of penny blanks exists. Consumers with pennies will still be able to use them for purchases. But without new pennies moving into circulation, businesses that complete cash transactions will have to start rounding up or down to the nearest nickel.
The move is not a surprise. The production of a penny costs more than the value of the coin. President Donald Trump said in February that he ordered the US Mint to stop making pennies, citing the cost.
“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! I have instructed my Secretary of the US Treasury to stop producing new pennies. Let’s rip the waste out of our great nations budget, even if it’s a penny at a time,” Trump said in a post to social media as he returned to Washington from the Super Bowl in February.
Trump actually undersold the cost argument — pennies cost more than three cents each to produce.
But the cost of a penny might be a smaller problem than the alternative. That’s because the Mint actually loses even more money on each nickel it produces. Each nickel costs 13.8 cents, with 11 cents of production costs and 2.8 cents of administrative and distribution costs. These figures are for the government’s most recent fiscal year, which ended in September.
People have been talking about getting rid of the penny for years.
During the most recent fiscal year, the Mint tried to cut those losses by making far fewer nickels — only 202 million, down 86% from the 1.4 billion nickels it minted in each of the previous two years. That’s also far fewer than the 3.2 billon pennies it made in 2024, the 4.1 billion it made in 2023 and 5.4 billion it made in 2022.
The Treasury statement did not address its plans for nickel production. It did estimate an immediate savings to taxpayers of $56 million from the halt of penny production.
“Given the cost savings to the taxpayer, this is just another example of our administration cutting waste for the American taxpayer and making the government more efficient for the American people,” it said.
Even if the Mint has to make only 850,000 additional nickels in 2025 to meet demand, that would wipe out any savings from eliminating the penny. If the Mint goes back up to making 1.4 million nickels a year, that would cost $78 million more than any savings from the pennies it stopped producing.
The Mint would likely have to make more nickels than that — probably in the range of 2 million to 2.5 million a year if it stops making pennies permanently, based on the track record in other countries that dropped their lowest valued currency, said Mark Weller, executive director of the Americans for Common Cents, a trade group funded primarily by Artazn, the company that has the contract to provide the blanks used to make pennies.
“In most countries, the lowest domination coin is the most minted coin,” he said.
But the idea of dropping the penny is supported by others, including some merchants.
The National Association of Convenience Stores has agreed in the past with the idea of getting rid of the penny to speed transaction time, even if only by a second or two for each customer paying with cash.
“Convenience stores sell a lot of products, but what they really sell is speed of service,” Jeff Lenard, a spokesman for the group, told CNN in February. He couldn’t say if nickel usage would increase, but he did say that without the penny cash transactions would be rounded to the nearest nickel.
And the United States wouldn’t be the first to dump its least valuable coin. Canada stopped minting their pennies in 2012 and stopped using them entirely in 2013.
One reason that the US government has to make so many pennies every year is because a large percentage of them don’t remain in circulation. They are stashed in penny jars or junk drawers at home, or they fall on the ground and people don’t even bother to pick them up.
Many people leave behind the pennies they get as change in leave-a-coin-take-a-coin dishes on counters of many retailers. Those dishes are increasingly holding nickels as well, which also have few uses.
“When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful,” said Gregory Mankiw, a Harvard economics professor and former chairman of the President’s Council of Economic Advisers under President George W. Bush.
Goodbye to the Penny! Treasury Department announces plan to phase out the coin
The U.S. Mint made its final order of penny blanks and said it plans to halt the production of pennies once those run out, likely in early 2026. While the penny is only worth a cent, the coin costs nearly 4 cents to create. After production stops, Americans will still be able to use pennies in cash transactions, however, businesses will have to adjust prices. The announcement comes as the cost to make pennies has increased by over 20 percent in 2024, and as President Donald Trump announced he would cease production of the coin. There are currently about 114 billion pennies currently in circulation, though many are not frequently used when making purchases.
The U.S. Mint made its final order of penny blanks and said it plans to halt the production of pennies once those run out, which will likely be in early 2026, according to The Wall Street Journal, which first reported the news.
In stopping the production of pennies, the Treasury expects an immediate annual savings of $56 million in reduced material costs, officials said Thursday. While the penny is only worth a cent, the coin costs nearly 4 cents to create.
New pennies will stop going into circulation by early next year. After production stops, Americans will still be able to use pennies in cash transactions, however, businesses will have to adjust prices.
With the change, businesses will either have to round prices up or down to the nearest 5 cents to allow cash transactions to take place. State and local governments are instructed to provide guidance to retailers so that sales taxes are correctly recorded, the Treasury said.
The announcement comes as the cost to make pennies has increased by over 20 percent in 2024, and as President Donald Trump announced he would cease production of the coin.
“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!” Trump previously wrote on his Truth Social site. “I have instructed my Secretary of the US Treasury to stop producing new pennies.”
There are currently about 114 billion pennies currently in circulation, though they have become a less common coin to use — with many living under couch cushions or in long-forgotten piggy banks.
According to the Federal Reserve, some 60 percent of actively circulating coins — roughly worth $14 billion — sit in coin jars.
Americans also throw away some $68 million in coins each year, according to the Journal.
There are currently 114 billion pennies in rotation, though many are not frequently used when making purchases. (Getty Images)
Congress, which dictates currency specifications such as the size and metal content of each coin, could make Trump’s order permanent through law, though previous efforts to put the penny to rest have failed.
While Trump is not the first politician to take up the cause, with many advocates citing the high cost to create the coin, there are many fans of the penny, namely collectors.
The penny, which features President Abraham Lincoln’s profile, is also the most popular coin made by the U.S. Mint, which reported making 3.2 billion of the coin last year.
Fans of the penny took to social media to air their grievances, other took the moment to crack jokes.
“’A bitcoin for your thoughts?’ future generations prolly,” one person wrote on X.
“So what happens to the take a penny leave a penny at gas stations?” another person questioned.
Another commentator joked: “Great how am I supposed to share my thoughts now?”
With reporting from the Associated Press.
Say goodbye to the penny, it won’t be here much longer
The U.S. Treasury Department will stop putting new one-cent coins into circulation by early 2026. The department’s rationale is that it costs more to produce a penny than it’s actually worth, with one penny costing nearly four cents to make. The move also has bipartisan support, with both President Donald Trump and President Barack Obama previously expressing support for eliminating the penny. Americans can still use pennies in cash purchases following the initial halt in production, but as the coins eventually become scarce, businesses will need to adjust prices. State and local governments are advised by the Treasury to provide guidance to retailers, ensuring that sales taxes are collected in accordance with the law. The Treasury told SAN that the move will offer $56 million in yearly savings. It follows the likes of Canada, which halted production of its one- cent coin in 2012 and began rounding cash transactions up to the nearest five cents.
After the new pennies stop being produced, the Treasury notes, businesses will eventually need to start rounding cash transactions up or down to the nearest five cents, which may make prices like “$9.99” a thing of the past as well.
A penny made is nearly a nickel lost
The department’s rationale is that it costs more to produce a penny than it’s actually worth, with one penny costing nearly four cents to make.
A Treasury spokesperson told Straight Arrow News, the cost of making a penny increased by 20% in the 2024 fiscal year. The spokesperson added, there are an estimated “114 billion pennies in circulation in the U.S., but are severely underutilized.”
The spokesperson said in an email to Straight Arrow News, “Given the cost savings to the taxpayer, this is just another example of our administration cutting waste for the American people and making the government more efficient for the American people.”
The move also has bipartisan support, with both President Donald Trump and President Barack Obama previously expressing support for eliminating the penny. Trump asked the Treasury earlier this year to stop further production of pennies, and since his request, legislation to end production of one-cent coins has popped up in the U.S. Senate and House.
Sen. Mike Lee, R-Utah, in partnership with Jeff Merkley, D-Ore., introduced a bipartisan bill this month, named the Make Sense Not Cents Act, that aims to eliminate the penny. The bill follows an effort by Democrats and Republicans in the House, who introduced the Common Cents Act, which also seeks to end the production of pennies.
The Journal reports, the U.S. government lost more than $85 million in 2024 on the estimated 3 billion pennies it made. The Treasury told SAN that the move will offer $56 million in yearly savings. The department will reportedly halt production once it uses up all the blank templates used to make pennies. The last order of the templates was put out this month, according to the Journal.
Should you keep your pennies?
Americans can still use pennies in cash purchases following the initial halt in production, but as the coins eventually become scarce, businesses will need to adjust prices. However, the Journal notes, non-cash bills and transactions will still need “to be priced at exact change.” State and local governments are advised by the Treasury to provide guidance to retailers, ensuring that sales taxes are collected in accordance with the law.
The Treasury’s authority
Congress mandates currency production, which includes the size and material of the coins, and can discontinue or remove coins. However, the Treasury asserts that it has the authority to stop the production of new coins.
According to the Federal Reserve, around 60% of actively circulating coins or up to the amount of $14 billion, sit in coin jars, and Americans reportedly throw away up to $68 million in change annually.
Following other countries’ leads
The Treasury’s reported move follows the likes of Canada, which halted production of its one-cent coin in 2012 and began rounding cash transactions up to the nearest five cents. Down under, in Australia and New Zealand, one-cent coins have been out of those nations’ circulations for decades.
Fun facts
The U.S. first introduced the penny in 1792. The one-cent coin has since gotten smaller in size and changed in the material used to manufacture it, from pure copper to a combination of zinc and copper. The first began featuring President Abraham Lincoln on its beginning in 1909 to commemorate his 100th birthday.
Source: https://www.cnn.com/2025/05/22/business/us-discontinue-penny