Pennies, Policy, and Poor Planning: How the Government Botched a Simple Change

Update, September 2026: I originally wrote this in November 2025, while businesses were trying to figure out what the end of penny production would actually mean at the cash register. Since then, the U.S. Mint struck the final circulating penny on November 12, 2025, and the Treasury Department issued nonbinding rounding guidance on December 23, 2025. I’ve updated the article where those later developments matter, while keeping the original argument intact.

Ending the penny should have been one of the easiest government decisions imaginable. It had become absurdly expensive to manufacture a one-cent coin, and fewer people were using cash in the first place.

The problem was never really the decision. The problem was the rollout.

At the time I first wrote this, retailers were scrambling over rounding rules, state consumer-protection laws, sales-tax calculations, and what to do when the register simply didn’t have enough pennies. What should have been a boring administrative change became another example of government making a decision first and working out the practical details later.

The Penny Was Already a Problem

By the end of circulating penny production, the economics were ridiculous. According to the U.S. Mint, producing each penny had risen to 3.69 cents.

That doesn’t mean the Mint itself was going broke. The Mint also earns seigniorage on profitable denominations and revenue from numismatic and bullion programs. But continuing to manufacture a coin for several times its face value had stopped making much sense.

So I still think ending circulating penny production was the right call. The penny didn’t need rescuing. The transition needed planning.

Where the Plan Fell Apart

When the phaseout began, businesses didn’t have one clear national rule telling them exactly how to handle cash totals. That mattered because retail systems, state sales-tax rules, and consumer-protection laws were all written around transactions calculated to the cent.

Some large retailers responded conservatively by rounding cash totals down when pennies weren’t available, because losing a cent or two was cheaper than inviting a legal fight over rounding up.

That was the part that struck me as ridiculous. The United States had years of examples from other countries showing how to retire a low-value coin. Yet we still managed to get to the register before agreeing on what the cashier was supposed to do.

Treasury Eventually Issued Guidance

This is the biggest factual change since I first published the article. On December 23, 2025, the Treasury Department issued penny-transition guidance.

Treasury recommends that, when penny change is unavailable, businesses use symmetrical rounding on the final cash total after taxes and fees are calculated: totals ending in 1, 2, 6, or 7 cents round down; totals ending in 3, 4, 8, or 9 cents round up. Electronic payments continue to the exact cent.

That is basically the common-sense solution the country should have had ready from the beginning.

But the guidance is nonbinding, and Treasury itself acknowledges that states and localities still control their own sales-tax and consumer-protection rules. So the later guidance improved the situation without magically erasing the patchwork problem.

Canada Already Showed Us How

Canada retired its penny in 2012 with a straightforward system: cash totals were rounded to the nearest five cents, while electronic payments remained exact.

The lesson was never that eliminating a penny is complicated. The lesson was that changing a national payment convention works better when you tell everyone how it is supposed to work before the old system starts disappearing.

For Most People, This Is Still a Small Change

Despite all the noise, the practical effect on most people is tiny. Pennies remain legal tender. Existing pennies can still circulate. Debit cards, credit cards, checks, gift cards, and other non-cash payments can still settle to the exact cent.

If you pay cash and pennies aren’t available, you may occasionally gain or lose a couple of cents through symmetrical rounding. Over time, those differences should largely balance out.

So no, the death of the penny is not an economic apocalypse. It is mostly an administrative problem that became much more dramatic than it needed to be.

The Bigger Story Is What Happened to the Dollar

The more interesting question is why a one-cent coin became economically pointless in the first place.

A penny once had enough purchasing power to matter. Today, the government stopped making it because the coin itself cost several times its face value to produce and because one cent buys almost nothing.

That leads directly into the companion piece I wrote a few days later: The Penny’s Demise: What the Founders Warned Would Happen.

My 2 Cents Worth

I still think ending the penny was sensible. I also still think the government made an easy transition harder than it needed to be.

The later Treasury guidance was a useful correction. I just wish the guidance had come with the decision instead of after businesses were already improvising.