In November 2025, the United States ceased production of the penny. For consumers, the end of the penny might just mean lighter pockets. But for you, the small business owner, the implications are more operational. How do you handle cash transactions? What happens to your point-of-sale system? Are you still legally required to accept pennies?
This guide breaks down everything you need to know about the penny production cessation for small businesses. We’ll cover why this is happening, the timeline for the transition, and practical steps to prepare your operations for a penniless future.
Contents:
- Timeline and Transition
- Impact on Small Businesses
- Legal and Practical Considerations
- Preparing Your Business
- FAQ
Why the Penny Is Being Phased Out
The decision to halt penny production boils down to simple math: It costs too much money to make money.
Rising Production Costs
Over the last decade, inflation and rising metal prices have inverted the value proposition of the penny. According to the U.S. Treasury, the cost to mint a single penny has jumped from 1.3 cents to 3.69 cents. Essentially, the government loses money on every unit produced.
Significant Annual Savings
By stopping production, the U.S. Mint projects an immediate annual savings of $56 million in material costs alone. When you factor in manufacturing facilities, labor, and overhead, the savings for taxpayers become even more significant.
The Shift to Digital Payments
Beyond production costs, consumer behavior has shifted. We live in an increasingly cashless society. With the rise of tap-to-pay, mobile wallets, and credit card usage, the practical utility of the penny has plummeted. Most pennies end up in jars, under car seats, or in the trash, rather than circulating in the economy.
Timeline and Transition
Understanding the timeline is crucial for managing your cash flow and register operations.
Immediate Halt on Manufacturing
The federal government has already stopped manufacturing new pennies. However, this doesn’t mean pennies will disappear overnight.
The Recirculation Phase
The Federal Reserve will continue to recirculate the estimated 114 billion pennies currently in existence. They will remain in the supply chain as long as possible. The Treasury Department is actively encouraging businesses and consumers to spend their on-hand pennies to keep them moving during this transition period.
So, while you won’t see shiny new 2026 pennies, the old ones will still be legal tender and will likely remain in your till for years to come.
Impact on Small Businesses
The end of the penny introduces new operational procedures, specifically regarding how you handle cash at the register.
Rounding Rules for Cash Transactions
As the supply of pennies dwindles, merchants will eventually run out of them for making change. When this happens, you will need to round cash transactions.
A report from the the National Council of State Legislators recommends symmetrical rounding to the nearest 5 cents. Here is how it works:
- Round Down: If the final amount ends in 1, 2, 6, or 7 cents.
- Round Up: If the final amount ends in 3, 4, 8, or 9 cents.
- Exact Amounts: Transactions ending in 0 or 5 cents remain unchanged.
Example:
- A total of $10.02 rounds down to $10.00.
- A total of $10.04 rounds up to $10.05.
Important Note: Rounding applies only to the final total of a cash transaction. Credit card, debit card, and check transactions should always be processed to the exact cent.
Sales Tax Implications
A common concern is how rounding affects sales tax compliance. Generally, sales tax laws require tax to be calculated on the exact price of the goods or services.
You should calculate the sales tax on the unrounded amount first. Once the total (price + tax) is determined, you then apply the rounding rule to the final cash payment. This ensures you are collecting and remitting the correct tax amount based on the actual sale price, regardless of the cash rounding adjustment.
However, state and local tax laws vary. It is wise to consult with your accountant or local tax authority to confirm specific requirements for your jurisdiction.
Point-of-Sale (POS) System Updates
Your biggest technical hurdle will likely be your POS system. Modern POS systems are precise, and manual rounding can lead to drawer discrepancies and book balancing nightmares.
Contact your POS provider immediately to see if they have a software update available for “penny rounding” or “cash rounding.” Automating this process ensures:
- Consistency: Every employee rounds the same way.
- Transparency: The rounding adjustment appears clearly on the customer’s receipt, building trust.
- Accuracy: Your end-of-day reports will match the cash in the drawer.
Legal and Practical Considerations
While production has stopped, the penny has not been demonetized.
Pennies Remain Legal Tender
Pennies retain their value indefinitely. You cannot refuse to accept them as payment simply because they are no longer being made. If a customer wants to pay for a $5 item in 500 pennies, that is still legal tender (though certainly inconvenient).
Handling Refunds
Refund policies generally remain at your discretion, but fairness is key. If a customer paid exact change electronically, refund the exact amount. If you are refunding cash and lack pennies, apply the same fair rounding rules used for sales.
Split Payments
For split payments (e.g., part cash, part card), apply the cash payment first if possible, or settle the noncash portion to the exact cent and only round the remaining cash balance if necessary.
Preparing Your Business for the Change
Don’t wait until your coin rolls run dry. Start preparing your team and your store now.
1. Train your staff.
Your frontline employees will be the ones explaining this to customers. Train them on the specific rounding rules (1, 2, 6, 7 down; 3, 4, 8, 9 up) so they can answer questions confidently. Role-play a few transactions so they get comfortable with the math if your POS doesn’t handle it automatically yet.
2. Update signage.
Place a small sign at your register explaining the new policy. A simple message works best:
“Due to the U.S. Treasury halting penny production, cash totals may be rounded to the nearest nickel. Electronic payments are not affected.”
3. Collaborate with your bank.
Talk to your bank about their coin deposit policies. While they will still accept pennies, depositing large quantities might require specific rolling or wrapping procedures as the coins become less standard.
Conclusion
The end of the penny is a significant shift in American currency, but it doesn’t have to be a disruption. By updating your POS systems and communicating clearly with your team and customers, you can navigate this transition smoothly.
View this as an opportunity to streamline your cash handling. Fewer coins mean faster counts at the end of the shift and less heavy lifting for your bank runs.
Frequently Asked Questions (FAQs)
Will rounding increase prices for my customers?
No. Symmetrical rounding is designed to be neutral. Over time, the number of transactions rounded up will roughly equal the number rounded down, resulting in no net increase in consumer prices.
Can I still deposit pennies at my bank?
Yes. Pennies remain legal tender. You can continue to deposit them at your financial institution, though you should check if they have new requirements for bulk coin deposits.
How do I handle foreign currency or gift cards?
Rounding rules generally apply only to U.S. cash currency. Payments made with gift cards or foreign currencies should be settled to the exact amount without rounding adjustments.
Is it illegal to refuse pennies?
While private businesses generally have the right to determine which payment methods they accept, pennies remain legal tender. Refusing them could alienate customers, even if federal law doesn’t explicitly mandate acceptance for all private debts in all contexts. It is best practice to accept them as long as they circulate.
For additional information, consult the U.S. Treasury’s Penny Production Cessation FAQs.
