The Economics Behind Ending the Penny
The research that drove the November 2025 decision — production costs, environmental impact, and the international precedents the U.S. followed.
Research
Executive Summary
Data-driven analysis of penny production costs and economic impact from official sources.
Direct losses from penny production in 2024
Nearly 4× its face value to manufacture
Pennies minted in 2024 (57% of all coins)
According to the U.S. Mint's FY 2024 Annual Report, the federal government lost money producing pennies — each cost nearly four times its face value. FY 2024 was the 19th consecutive year of losses, and production ended in November 2025.
More than a dozen countries had already eliminated their lowest-denomination coins with minimal economic disruption and no measurable inflation impact.
Economic Impact
Production costs and impact on businesses nationwide.
The 2025 Retailer Shortage
Survey data from October–November 2025, the peak of the shortage. The Federal Reserve resumed penny deposits in January 2026 and order fulfillment in March 2026, easing supply.
Of major retailers reported 1,000+ store locations without pennies [RILA]
Of retailers rounded down to benefit consumers, absorbing millions [RILA]
Loss Kwik Trip projected for 2025 from rounding down [Fortune]
Industry estimates put cash handling costs at up to 5% of cash intake for some businesses
Transportation
Secure transport from mints to banks nationwide
Labor Time
Employee time counting low-value coins at shift changes
Banking Overhead
Sorting and wrapping fees (10¢ per roll markup)
Storage
Vault space for billions of low-value coins
Deep Dive Research
Explore detailed analysis on specific topics
Common Misconceptions
Separating fact from fiction about penny elimination
Eliminating the penny will cause inflation
12+ countries eliminated low-denomination coins with no measurable inflation. Market competition prevents price increases.
We need pennies for exact change
Electronic payments are unaffected. Cash rounding only applies to physical currency and balances out over time.
Charities depend on penny donations
Canadian charities reported no impact. Digital donations have grown. Major charities support elimination.
The penny has historical value
The U.S. eliminated the half-cent in 1857. Pennies remain legal tender and collectible.
Rounding will hurt low-income consumers
Symmetric rounding is designed to balance out per shopper. Richmond Fed researchers estimate a small aggregate cost (~$6M/yr economy-wide), concentrated among cash-heavy users — which is why most state guidance recommends rounding down.
Businesses can easily absorb the transition
During the 2025 shortage retailers reported losing millions rounding down, and industry estimates put cash handling at up to 5% of cash intake — a real but temporary squeeze that eased as pennies recirculated in 2026.
What Happened Next
Production ended in November 2025. The open questions moved to the states — which are now writing the rounding rules the federal bill left behind.
- No measurable inflation impact in precedent countries
- Digital payments keep exact amounts everywhere
- 22 states with rounding legislation; 17 laws enacted
- Effective dates rolling in from June 2026 to January 2027
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