Killing the Penny Was the Easy Part
Nobody wrote the rules for what comes next, so your change is a free-for-all.
I once tried paying my subway fare with postage stamps. Because I never have cash. I know the idea is to hide money somewhere, but if I do, I always find a way to spend it. Or forget where it is, only finding a crumpled $20 pushed somewhere months later. Probably with my missing Merit Lip Blush. And there is $7 in single bills in Radio’s orange fanny pack that holds his cookies and poop bags when we walk. It’s money we found at the park. We plan to donate it to a good cause. As soon as we remember to.
Even though I rarely use cash, I’m pissed that the President fired the penny. He did this last year. Now, there’s not enough.
Think about the last time you were in a gas station or convenience store, or anywhere people pay cash. There probably was a note at the counter telling you about the nationwide penny shortage.
The U.S. Mint struck the last penny Nov. 12, 2025. It’s still legal currency, and the 114 billion pennies in circulation still can be spent.
It costs the government 3.69 cents to make a penny, which is more than the coin is worth. Eliminating the penny is supposed to save the government $56 million a year. In turn, it will cost us $6 million annually. It’s been dubbed a “rounding tax.” But it equates to 2.3 cents per person per year.
Here’s the real rub: there are no rules. Without pennies, totals have to get rounded up or down to the nearest nickel to make change. The price of the item doesn’t change, but your total bill does when you pay cash. And there isn’t any agreement on how or when this happens. Do totals get rounded up or down? It’s a free-for-all, with every business making their own decision.
Currently 20 states have passed laws that outline how to address this. And while the intent of each of these laws is supposed to be similar, the variation is drastic. If you’re curious, here’s a tracker that shows what’s happening in each state. A majority haven’t passed any law.
Restaurants — an already struggling industry — are expected to be hit. A majority are rounding the final bill down, out of lawsuit fears. The National Restaurant Association says this is costing businesses about $13 million every month, which could add up to as much as $168 million a year. So it’s not a stretch to expect workers who rely on cash tips will be hurt.
And yes, it would be nice to think “oh this will just sort itself out.” It won’t. The only pennies available are those in circulation. And they’re sorta like socks: they disappear, one at a time. The pool shrinks day by day as pennies end up in jars, cars and couch cushions. The Fed tried when it reopened penny deposits in January and bank orders in March. But the Retail Industry Leaders Association, the trade group for big-box retailers, said the move shouldn’t be seen as a solution to the broader circulation problem. Translation: this ain’t a fix.
Not to be outdone, enter the nickel. Eliminating the penny means there is now more demand for nickels. The cost of minting a nickel? More than double the value of the coin. The Mint spends 13.8 cents to produce a nickel. So just like the penny, the government is also losing money on nickels.
So what if nickels go away? Then the cost of the rounding tax for consumers becomes larger: nine times the penny-only cost. That’s a real $55.58 million a year.
Enter Congress. The bipartisan Common Cents Act – yes, that’s really the name; it’s not a joke – was intended to set one policy for everyone, everywhere.
But, when the House approved it last month, a change was made to the bill. Now the rounding rules – when to go up or down – are merely guidance.
These are the recommendations that can be ignored:
If a price ends in 1, 2, 6, or 7: it can be rounded down to the nearest nickel.
If an amount ends with 3, 4, 8, or 9: it can be rounded up.
Even the language is loose: it “can be.” Maybe I can also just not pay my bill?
The House “recommendation” was sent to the Senate. Which clearly isn’t in a hurry to act. No vote is scheduled, and their “extended” recess starts Aug. 7. They won’t be back in session until Sept. 14.
At least I have $7 in my orange fanny pack. I may need it. Watch your wallet. Change is coming.
When life stops making sense, we shop. More soon.
It’s bizarre how loosie goosie it all is. I was thinking about this yesterday, but in the context of credit cards: why aren’t we rounding for credit card transactions now too? Seems like there needs to be some degree of consistency. But that’s probably asking for too much
Thanks for inviting us into the conversation, Rani. For those unfamiliar with us, Centsless is building cash rounding compliance infrastructure to help merchants and their POS providers navigate the post penny economy.
Over the past eight months, we have been researching this transition at both the legislative and transaction level, including enacted state laws, agency guidance, federal proposals, and the operational edge cases that appear once those rules reach the register.
One of the biggest misconceptions is that cash rounding is simply a matter of programming a register to round to the nearest nickel. The harder question is determining which rule applies to that transaction in the first place.
States are taking different approaches to when rounding is permitted or required, how the adjustment is calculated, and which transactions are affected. Local requirements can add another layer.
Then there is the transaction architecture itself. Sales tax still needs to be calculated to the exact cent before rounding. Noncash tenders remain exact. SNAP and EBT protections need to be preserved. Split tenders, cash tip payouts, refunds, receipts, reconciliation, and audit records all introduce additional considerations.
That is why we are building Centsless as a jurisdiction aware compliance layer that can sit within the transaction flow, rather than treating this as simply a rounding button at the register.
Killing the penny may have been the easy part. Translating everything that follows into consistent, auditable transactions across thousands of locations is where the larger challenge begins.
We appreciate you bringing more attention to it, Rani. This is exactly the conversation retailers, policymakers, and payment technology providers need to be having.
More on our work and live legislative tracking: www.centsless.org