More than a month after the U.S. Mint stopped printing pennies, there is now guidance on rounding for cash transactions. Shortly before Christmas, the Treasury Department issued the “Penny Production Cessation FAQs.”
Rounding Guidance for Cash Transactions
The Treasury Department shares that as pennies fall out of circulation, merchants will need to round transactions either up or down to the nearest five cents.
However, most states require sales tax to be calculated on the final sale price rounded to the nearest penny. How states and localities will ultimately amend their sales tax laws is the right and responsibility of those jurisdictions.
Recent guidance from the National Council of State Legislators gives some indication how states may adapt. The NCSL’s November 21, 2025, report entitled Elimination of the Penny: Cents-able Considerations states: “The most recommended form of rounding is symmetrical rounding whereby if the final digit of the total transaction amount (including taxes) is 1, 2, 6, or 7 cents, the amount is rounded down to the nearest multiple of five. If the final digit is 3, 4, 8, or 9 cents, the amount is rounded up. Transactions totaling exactly $0.01 or $0.02 might be rounded up to $0.05. Rounding rules would not apply to payments made via electronic methods, checks, gift cards, or other non-cash instruments.”
During the past decade, the total production cost of the penny has risen from 1.3 cents to 3.69 cents per penny. Given the increasing number of non-cash transactions and the very low purchasing power of a single penny, the Department of the Treasury does not believe continued production is fiscally responsible or necessary to meet the needs of commerce in the United States.
Penny First Minted in 1792
The penny was one of the first coins made by the U.S. Mint after its establishment in 1792. The design on the first penny was of a woman with flowing hair symbolizing liberty. The coin was larger and made of pure copper, while today’s smaller coin is made of copper and zinc.
Despite the halt in manufacturing new pennies, the Federal Reserve will continue to recirculate the roughly 114 billion pennies currently in existence for as long as possible. How length of time existing pennies remain in circulation depends largely on consumer behavior.
Credit Union Impact
The cessation of penny production has greatly impacted retail and financial institutions. Ahead of the upcoming state legislative sessions, we would like to hear about how pennies are effecting your credit union.
Please reach out to let us know what you are experiencing.
- What questions are you receiving from members?
- Are front-line employees having to educate members more about rounding for cash transactions?
- Are you able to receive penny deliveries?
We will continue to monitor any potential changes to state laws related to rounding in the coming legislative sessions.
Learn More
U.S. Treasury—Penny Production Cessation FAQs
U.S. Mint—Penny F&Qs
U.S. Mint—Overview and History of the Penny
