U.S. Treasury Releases Guidance on Penny Phase-Out

Wednesday, December 24, 2025 – Yesterday, the U.S. Department of the Treasury issued a frequently asked questions (FAQ) document to address the implications of halting production of the one-cent coin (penny). This guidance comes as businesses, particularly energy marketers, grapple with diminishing supplies of pennies in circulation.

The Treasury reiterated that the U.S. Mint ceased minting new pennies earlier in the year, primarily because production costs—now at approximately 3.69 cents per coin—significantly exceed the coin's face value. No additional pennies will be produced for general circulation, though limited numismatic versions may continue for collectors. Existing pennies remain legal tender indefinitely and can circulate via the Federal Reserve as long as inventories last. Consumers are encouraged to use pennies in transactions, and retailers may accept them as payment.

With penny supplies expected to dwindle over time, the FAQ notes that retailers might round total amounts in cash transactions to the nearest five cents when exact change cannot be provided. This rounding policy applies exclusively to cash payments; card, digital, and electronic transactions will remain calculated to the exact cent.

Additionally, the guidance highlights that most states currently mandate sales tax computation based on the pre-tax amount rounded to the nearest penny. The Treasury emphasized that any changes to these tax rules fall under state and local authority. The department is exploring further recommendations to assist businesses in regions with varying or intricate rounding requirements.

EMA and a coalition of energy and retail associations are urging congressional leaders to swiftly make improvements to the Common Cents Act which would allow businesses to round cash transactions to the nearest nickel. Without a national standard, retailers risk violating state laws requiring exact change.