The Vanishing Penny

The penny was one of the first coins made after the U.S. Mint was established in 1792. The government recently made its final order of penny blanks. After the supply runs out, the production of United States pennies will cease. There are an estimated 114 billion pennies currently in circulation, meaning that it will take a while before pennies are phased out of everyday use.

The decision to eliminate the production of pennies was purely financial. In fiscal year 2024, it cost 3.7 cents to produce and distribute one penny. Retiring the penny only makes sense if it’s paired with broader coin reforms. While the penny has traditionally been minted in larger quantities, resulting in a greater total loss, eliminating the penny could shift demand toward nickels in cash transactions. If that happens, the increased production of nickels could lead to even higher overall losses for the U.S. Mint. The nickel costs about 10.5 cents per coin to produce, according to the U.S. Mint.

Even after the government stops producing pennies, existing ones will remain legal tender. As the availability of pennies dwindles, retailers may choose to round cash transactions to the nearest five cents. The decision of if and when to round transactions currently rests with the specific retailer rather than government policy. Check and credit card transactions will remain unchanged. Depending on the approved rounding strategy, cash sales could become more advantageous to consumers.

The phasing out of the penny raises additional questions for retailers. Will cash transactions become smoother or more complicated? What will the strategy be for pricing, round to the nearest dollar? Is this the beginning of a cashless future? How will point-of-sale systems adapt?

Could the last pennies be valuable? Doubtful. The U.S. Mint made about 3.2 billion pennies in 2024, according to its annual report, so there will be billions of 2025 pennies available.

While the Trump administration and the U.S. Treasury can halt production, officially eliminating the penny requires congressional action, as only Congress has the constitutional power to change U.S. currency laws. Prior congressional efforts to eliminate the penny have failed.