The National Conference of State Legislatures published a comprehensive report addressing the policy, legal, and economic considerations states face following the federal government's decision to cease penny production. The report provides guidance on rounding rules, tax implications, and recommends nine areas requiring state action.
The National Conference of State Legislatures (NCSL) released a landmark report titled "Elimination of the Penny: Cents-able Considerations" to help states navigate the transition away from penny-based transactions.
Background
On February 9, 2025, the White House instructed the Department of the Treasury to cease production of the penny, citing production costs of roughly 3.7 cents per penny. The final regular minting occurred in November 2025, with future minting reserved only for ceremonial limited productions.
Key Findings
The report notes that while the federal government did not issue regulations around the end of production, many Federal Reserve terminals have begun experiencing shortages and in numerous instances have ceased supplying and accepting pennies. This has required vendors to make spot decisions on how to handle cash transactions.
Recommended Rounding Approach
The NCSL recommends symmetrical rounding as the standard approach:
- If the final digit is 1, 2, 6, or 7 cents, round down to the nearest multiple of five
- If the final digit is 3, 4, 8, or 9 cents, round up
- Rounding rules would not apply to electronic payments, checks, gift cards, or other non-cash instruments
Nine Areas Requiring State Action
The report identifies critical policy areas states must address:
- Rounding Clarity
- Federal Role
- Legal and Statutory Adjustments
- Revenue Impact and Allocation
- Refunds and Consumer Protections
- Forms, IT Systems, and Implementation
- Communication, Training, and Coordination
- Network Payment Rules and Compliance
- Policy Direction and Legislative Approach
State Actions to Date
At the time of the report, few states had taken direct action. Utah's Division of Consumer Protection published "Essential Guidance on Cash Rounding" recommending symmetrical rounding, while other states are considering similar administrative guidance rather than new legislation.
The report serves as a comprehensive resource for state legislators and policymakers navigating this significant change to American commerce.