The U.S. Department of the Treasury released comprehensive FAQ guidance for businesses and consumers on handling cash transactions as pennies phase out of circulation. The guidance recommends symmetrical rounding to the nearest nickel for cash transactions while maintaining exact pricing for electronic payments.
The U.S. Department of the Treasury published official Frequently Asked Questions (FAQ) guidance addressing how businesses and consumers should handle the transition as pennies phase out of circulation.
Why Production Was Suspended
Over the past 10 years, the total production cost of the penny rose from 1.3 cents to 3.69 cents per penny. The U.S. Mint projects an immediate annual savings of $56 million in reduced material costs by stopping penny production. Secretary Bessent, working closely with President Trump, exercised authority under federal law (31 U.S.C. §§ 5111(a)(1) and 5112(a)(6)) to cease production.
Key Guidance for Businesses
The Treasury recommends:
- Symmetrical Rounding: If the final digit is 1, 2, 6, or 7 cents, round down; if 3, 4, 8, or 9 cents, round up
- Cash Only: Rounding applies only to cash transactions; electronic payments should remain exact to the penny
- Legal Tender: Pennies remain legal tender indefinitely and businesses should continue accepting them while available
- Transparency: Apply rounding practices in a fair, consistent, and transparent manner
Consumer Impact
The Treasury states there should be no overall effect on consumer prices, as transactions will round down just as often as they round up. Sales tax will continue to be calculated on the exact purchase amount before rounding.
POS System Updates
The Treasury is actively collaborating with point-of-sale system providers to ensure systems are properly equipped to handle rounding and accurately calculate sales taxes. Businesses may choose to update their systems to automatically apply rounding for cash transactions.
Financial Institutions
Consumers and businesses may continue to deposit pennies at financial institutions. Pennies will continue to be legal tender and retain their nominal value in perpetuity.
This guidance provides the clarity that retailers and industry groups had been requesting since the penny shortage began affecting commerce nationwide.