Pennies No Longer in Production Impact Cash Transactions and Sales Taxes By Lance Jacobs, Managing Director, and Natalie Straus, CRCM, Director, Forvis Mazars On Nov. 12, 2025, the last penny was minted at the U.S. Mint in Philadelphia. The U.S. Secretary of the Treasury exercised authority under 31 United States Code (USC), Sections 5111(a) and 5112 to suspend production. The decision to cease penny production was largely rooted in cost. According to the U.S. Mint, the total production cost of the penny has risen from 1.42 cents to 3.69 cents per penny over the past 10 years. The U.S. Mint predicts the discontinuation of the penny will result in annual savings of $56 million. New pennies will no longer be manufactured, but according to the U.S. Department of the Treasury (Treasury), there are around 114 billion existing pennies in circulation. While the penny remains legal tender and may still be used for transactions, it is anticipated that the stoppage in production will reduce and eventually eliminate pennies in circulation. Federal Considerations The Federal Reserve is responsible for distributing coins to banks and credit unions. The Federal Reserve will still accept deposits of pennies from banks and credit unions; however, it indicates that the coin distribution locations accepting deposits will vary over time. Coin distribution locations will cease fulfilling penny orders when inventory is depleted. This will impact cash transactions, and it will be necessary to “round” such transactions in the absence of penny availability. Currently, there are no federal “rounding” guidelines. On July 23, 2025, the Common Cents Act passed out of the House Committee on Financial Services on a bipartisan basis. The act proposes the following rounding practices for cash transactions only: • If the price ends in $0.01, $0.02, $0.06, or $0.07, round down to the nearest $0.05. • If the price ends in $0.03, $0.04, $0.08, or $0.09, round up to the nearest $0.05. • If the price is exactly $0.01 or $0.02, round up to $0.05. However, further consideration is required before the act can be advanced for floor votes. In the meantime, Treasury recognizes that “states will approach this issue differently based on unique considerations” and indicates “businesses should apply rounding practices in a fair, consistent and transparent manner.” Business Impacts While the penny still remains legal tender, businesses are expected to choose between several options to reflect this change: choosing to round cash transactions to the nearest nickel, requiring exact change (though the ability to do this will be limited as fewer pennies are in circulation) or using credit card or digital transactions. The cessation of penny production and the resulting decrease in the number of pennies in circulation have implications for cash transactions for retailers selling taxable products. Several states have addressed the implications of this for sales and use tax purposes. In addition to the various administrative pronouncements, several states, including Arizona, Florida, Missouri and Nebraska, have pending legislation to address these issues. Colorado Banker 10
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