Impact of Penny’s Elimination on Consumers

Bassyonni

ago 2 hours

On November 12, 2025, a significant chapter in U.S. monetary history closed with the official end of penny production. This decision, made under former President Trump’s administration, will have notable implications for consumers, pricing, and sales tax calculations.

Impact of Penny’s Elimination on Consumers

The final one-cent coins were minted at the Philadelphia Mint, marking the end of a coin that had circulated since 1793. U.S. Treasurer Brandon Beach noted that this moment was historic, as it was the first time since 1857 that a circulating coin was officially retired. With the termination of penny minting, the supply will eventually decline as existing coins are lost or stored away.

A Brief History of the Penny

The penny’s roots extend back to the U.S. Coinage Act of 1792, which authorized various coin denominations. In its early days, the penny was made of pure copper and depicted Lady Liberty. Over the years, the penny underwent multiple design changes, including the introduction of the Lincoln portrait in 1909.

1793: First pennies minted from pure copper.
1857: Introduction of the smaller, cheaper penny comprising 88% copper and 12% nickel.
1943: Zinc-coated steel pennies produced due to copper shortages during WWII.
2010-2025: Pennies were 97.5% zinc with a 2.5% copper plating.

Economic Factors Behind the Elimination

The decision to eliminate the penny was driven by economic considerations. Each penny cost the U.S. Mint approximately 3.69 cents to produce, leading to an annual loss estimated at $56 million for taxpayers. Declining demand for cash transactions further diminished the penny’s practicality.

According to reports, the U.S. Mint produced fewer than 6 billion coins in the previous year, down from a peak of 15 billion in 2021. As automation increases, workforce reductions at the Mint have also occurred, decreasing from about 400 to 300 employees.

Cash Transactions and Rounding Up

With the penny no longer in circulation, cash transactions will require adjustments. Cash totals will now be rounded to the nearest five cents. While round-ups improve efficiency, they could complicate matters for consumers who prefer cash, especially in states with laws protecting cash customers.

For credit and digital card transactions, prices will remain exact to the cent. This may create disparities between cash and card users, leading to potential legal challenges regarding fairness in sales tax calculations.

Sales Tax Considerations

Sales taxes will still be computed before cash totals are rounded. However, the transition could cause confusion, as consumers and retailers navigate new pricing structures. The elimination of the penny may also challenge long-established pricing strategies, particularly the common practice of pricing items at $x.99.

Experts suggest that while consumers may experience slight changes in transaction totals, overall inflation should remain negligible. Studies from Canada, which retired its penny in 2012, indicate that rounding typically balances out over time.

Future of the Penny

While pennies will no longer be minted, an estimated 250 billion pennies are still in circulation, which will take years to exhaust. It remains to be seen whether there will be any movement in Congress to revive the coin, considering the lack of public support for reinstating it.

The end of the penny profoundly impacts consumer behavior, purchasing strategies, and cash management in everyday transactions. As society moves further toward digital currencies, adaptations to pricing and payment systems will continue to evolve.