Penny debate in the United States

A debate has existed within the United States government and American society at large over whether the one-cent coin, the penny, should be eliminated as a unit of currency in the United States. The penny costs more to produce than the one cent it is worth, meaning the seigniorage is negative – the government loses money on every penny that is created. Several bills introduced in the U.S. Congress would have ceased production of and/or eliminated the penny, but none have been approved. Such bills would leave the five-cent coin, or nickel, as the lowest-value coin minted in the United States.

A proof-quality penny

Other countries have also withdrawn coins no longer worth producing, such as Canada withdrawing the Canadian penny from circulation in 2013. The most recent time that the United States withdrew the lowest-value coin from circulation was with the half-cent coin (hay-penny), which was withdrawn in 1857, at which time the coin was worth approximately 17 cents in 2024 dollars.^[1][a]

In 2025, during the second presidency of Donald Trump, the U.S. Treasury announced a plan to halt penny production starting the following year.^[2] However, the coin will remain legal tender and in circulation, as only Congress has the power to eliminate forms of currency.

History

In 1990, United States Representative Jim Kolbe (R-AZ) introduced the Price Rounding Act of 1989, H.R. 3761, to eliminate the penny in cash transactions, rounding to the nearest nickel.^[3] In 2001, Kolbe introduced the Legal Tender Modernization Act of 2001, H.R. 2528,^[4] and in 2006, he introduced the Currency Overhaul for an Industrious Nation (C.O.I.N.) Act, H.R. 5818.^[5][6] While the bills received much popular support from the public, all failed to become law.^[7] Kolbe responded to criticism that rounding system would increase prices that could hurt the consumer and stated that the it "favors neither the consumer nor the retailer because the probability of rounding up or down is 50 percent either way – it would all come out even in the end."^[8]

In 2017, Senators John McCain (R-AZ) and Mike Enzi (R-WY) introduced S. 759, the Currency Optimization, Innovation, and National Savings (C.O.I.N.S.) Act of 2017, that would stop minting of the penny for 10 years and would study the question of whether production could cease thereafter. The bill died at the end of the 115th Congress with no hearings held by the Senate Committee on Banking, Housing, and Urban Affairs.^[9]

On February 9, 2025, President Donald Trump said he had ordered the Treasury secretary, Scott Bessent, to stop producing new pennies, a move that he said would help reduce unnecessary government spending. However, it is Congress, rather than the President, that authorizes the Treasury regarding what coins to mint.^[10] Regardless, this statement has been received with general approval by Americans, including Colorado governor Jared Polis, a Democrat who has been pushing to get rid of the penny since before Trump's inauguration.^[11] On April 30, 2025, Representatives Lisa McClain (R-MI) and Robert Garcia (D-CA) introduced the Common Cents Act, a bill to formalize an end to penny production and require cash transactions to be rounded to the nearest nickel.^[12] On May 22, 2025, The U.S. Treasury Department announced it would end penny production starting in 2026; the coin will remain legal tender and in circulation.^[13] According to the National Association of Convenience Stores and the National Retail Federation, retailers will eventually round prices to the nearest nickel when the supply of penny rolls runs out; this is not expected to happen immediately due to the large number of pennies in circulation and the coin's underuse.^[14]

Arguments

Production and distribution costs

Production at a loss

In 2024, it cost 3.69 cents to mint a penny.^[15] With a 2022 production of an estimated 6,359,600,000 pennies, this results in an annual loss for the U.S. government of around $110 million.^[16] Also, as the price of the raw materials from which the penny is made exceeds the face value, there is a risk that coins will be illegally melted down for raw materials.^[17][18]

Increased cost

Commissioned by Jarden Zinc, which supplies zinc "penny blanks" to the Mint, a 2012 report conducted by Navigant Consulting found that the government would lose money without the penny. According to the industry's front group Americans for Common Cents' website, "First, the Mint's fabrication and distribution costs include fixed components that will continue to be incurred whether or not the Mint produces the penny. Navigant estimates this fixed component at $13 million in FY 2011. Plus, there is $17.7 million in Mint overhead allocated to the penny that would have to be absorbed by the remaining denominations of circulating coins without the penny. Second, under current Mint accounting, the nickel costs eleven cents to manufacture. In a scenario (unlikely to occur) where nickel production doubled without the penny, Navigant concludes that with existing fixed costs, eliminating the penny would likely result in increased net costs to the Mint of $10.9 million, relative to the current state."^[19][20]

Effort to transport and count

Approximately 47 percent of coins minted are pennies and all these pennies (generally over 5 billion annually) must be transported by secure and therefore expensive means from the Mint to banks and then on to stores.^[21] Store employees spend valuable time counting low-value pennies at the end of a work shift. Banks often return loose coins on an armored truck to be sorted and wrapped so as to be ready to be given out to a customer. This process costs on the order of 10 cents per roll (a 20 percent charge on a roll of 50 pennies).

Limited utility of pennies

Lost productivity and opportunity cost of use

With the median wage in the US being $23.80 per hour in 2024,^[22] it takes 1.5 seconds of work to earn one cent. Thus pennies are discarded or avoided as their value is minimal versus the time to count, utilize, and manage.

Limited utility

Pennies are not accepted by any vending machines, or by most toll booths, and are generally not accepted in bulk. Economist Greg Mankiw says that "The purpose of the monetary system is to facilitate exchange, but ... the penny no longer serves that purpose."^[23] Pennies often drop out of circulation (for example, they are stored in jars in a person's home) and due to their low value are sometimes even discarded by consumers. This contributes to the United States Mint needing to produce more pennies than all other coins.^{[citation needed]}

Public preference for cashless transactions

According to a 2024 Federal Reserve study,^[24] cash transactions in 2023 were only 16% of all transactions and 42% of person to person transactions.

Effect on prices

Prices would not be higher

Research by Whaples in 2007, using data on nearly 200,000 transactions from a multi-state convenience store chain shows, that rounding would have virtually no effect. Consumers would gain a tiny amount – about 1⁄40¢ per transaction.^[25]

Elimination would not hurt the poor

Given that rounding (based on cash transaction totals being rounded up and down to the nearest multiple of five cents) is neutral at the transaction level, and that cash transactions are faster without having to deal with extremely low-value coins, people who disproportionately deal in cash transactions would be helped more by elimination of the penny.^[26] To gain consumer favor for reducing the use of the penny it could be legislated (either on a state or federal level) that all cash transactions totals over a nominal amount (say 25 cents) would need to be rounded down to the nearest multiple of five cents. Rounding down cash transaction totals is a win for the merchant too as it encourages cash sales and thereby avoids the electronic payment fee (typically on the order of two percent of the balance).^[27] However any savings on this fee must be balanced against the nontrivial costs of handling cash, which is why many merchants encourage electronic payments.

Public opinion

According to a national survey conducted in January 2017 by the polling team of Hart Research Associates and Public Opinion Strategies on behalf of the Dollar Coin Alliance, there is broad support for eliminating the penny, finding that 77 percent of voters support suspending production of the penny. When told of the savings made by suspending the penny, support jumped to 84 percent.^[28] The debate was featured on an episode of The West Wing in 2001, as several news outlets recalled in the context of the debate in 2025.^[29][30]

Historical precedents

There has never been a coin in circulation in the U.S. worth as little as the penny is worth in 2025, although other countries have coins with less purchasing power in circulation. Due to inflation, one nickel in 2017 was worth approximately what a penny was worth in 1974.^[1] When the United States discontinued the half-cent coin in 1857, it had a 2024-equivalent buying power of about 17 cents.^[1] After 1857, the new smallest coin was the one-cent, which had a 2024-equivalent buying power of 34 cents. The nickel fell below that value in 1973; the dime (at 10 cents) fell below that value in 1981; the quarter (at 25 cents) fell below that value in 2012.^[31]

Environmental and health hazards

Zinc can cause anemia or gastric ulceration in babies that inadvertently ingest pennies made after 1982. A single penny can kill a pet.^[32] Also, the mining of zinc and copper causes toxic pollution and is especially undesirable when considering the valuable metals being used to produce a coin with little utility.^{[citation needed]}

Nickels

A related debate exists for the nickel. As of 2024, nickels cost $0.1378 per coin to produce and distribute,^[33] providing an argument for elimination similar to the penny's production at a loss. The current face value of a nickel is also well below that which the last remaining lowest-denomination coin (the penny) held at the time of the half-cent's elimination in 1857.^[1]

A penny in 1977 was worth the same amount as a nickel in 2023.^[34] A nickel in 1977 was worth a quarter in 2023.^[35]

Lobbying

• The coin lobby Citizens to Retire the Penny support the elimination of the United States one-cent coin.^[36]
• The Coin Coalition of vending machine manufacturers, arcade owners, and soft drink companies supports eliminating the penny and the paper dollar bill.
• The sole provider of zinc "penny blanks," Jarden Zinc Products of Greeneville, Tennessee, has hired lobbyists to make the case for preserving the penny and their sales.^[37]
  • In 2011 $140,000 in retention fees were paid to Americans for Common Cents for its lobbying efforts on behalf of Jarden Zinc who received a $48 million government contract later that same year.
• Americans for Common Cents is a non-profit lobbying group dedicated to the protection of the one-cent coin. The group is primarily interested in preserving the penny for economic and historical reasons. Executive Director Mark Weller has testified on multiple occasions before Congress, most recently arguing that the use of cash protects privacy, provides economic stability and "is a public good" that should not be replaced by mobile money.^[38] In 2012, Weller was paid $340,000 by Jarden Zinc to discuss issues relating to minting with members of Congress and the US Mint.^[39] Weller has acknowledged this funding, saying that “We make no secret that one of our major sponsors is a company that makes the zinc ‘blanks’ for pennies."^[40]

Other options

Economist François R. Velde suggested in 2007 that the government make the penny worth five cents. This change would add about $6 billion to the money supply.^[41]

Congress passed the Coin Modernization, Oversight, and Continuity Act of 2010, which requires the Treasury to report on possible new metallic coin materials.^[42] In the 2014 Biennial Report, Appendix 4, the Mint reported that the previous study had "found that there was no more-cost-effective alternative material for the one-cent", and thus recommended that it continued its current mix of copper and zinc.^[43]

Precedents in other countries

See also: Withdrawal of low-denomination coins

Many countries outside the United States have chosen to remove low-value coins from circulation:

• Australia discontinued one-cent coins in 1990 and two-cent coins of the Australian dollar in 1989 due to the metal exceeding face value. They were fully withdrawn from circulation in 1992.^[44]
• Until 2012, Canada minted a one-cent coin of similar size and color as its American counterpart, with steel as the interior metal instead of zinc, though composition was near identical to US cents prior to 2000 and so it circulates at par in small quantities in the United States (and vice versa). However, on March 29, 2012, the Canadian government announced that it would eliminate the penny from its coinage system.^[45] The final Canadian penny was minted on May 4, 2012,^[46] and active distribution of the coin by the mint was discontinued on February 4, 2013.^[47] Since that date, businesses were encouraged to begin rounding cash transactions only to the nearest five-cent increment. Checks and transactions using electronic payments – debit, credit and payments cards – are not rounded.^[48]
• Indonesia demonetized its 10-rupiah coins on November 15, 1996, and 25 rupiah coins on August 31, 2010; it had also stopped producing 50 rupiah coins in 2003.
• Mexico's new peso transition in 1993 made the five-centavo coin the smallest denomination of the new currency. In 2009, new coins were minted only for the 10, 20 and 50 centavo denominations.^[49]
• New Zealand eliminated one- and two-cent coins of the New Zealand dollar in April 1990, and the five-cent coin in October 2006.^[50]
• At US military bases overseas, AAFES rounds up or down to the nearest one-twentieth denomination of currency.^[51]

However, many nations still use coins of similar or smaller value to the United States cent. In some cases, while the nominal value of the coin may be smaller than that of a US cent, the purchasing power may be higher:

• South Korea stopped minting ₩1 and ₩5 coins, but ₩10 coins (worth about US$0.01) are still minted with changing composition and used only in supermarkets.
• Some countries in the Eurozone use one and two-cent coins. As posted prices generally include taxes, it is possible (but not standard) for vendors to round prices to the nearest five cents and eliminate the need for smaller-value coins. However, Finland, Ireland and the Netherlands have abandoned the use of one- and two-cent coins altogether, with the lowest-value coin in use being the five-cent coin. Finland only ever produced a small number of one-cent coins, mostly for collecting and legal reasons.
• Panama and Ecuador, which use the United States dollar as their currency, mint their own coins including one-centavo pieces identical in size to the penny. However, prices and wages are generally lower in those countries than in the United States.

Laws regarding melting and export

On April 17, 2007, a Department of the Treasury regulation went into effect prohibiting the treatment, melting, or mass export of pennies and nickels. Exceptions were allowed for numismatists, jewelry makers, and normal tourism demands.^[52] The reason given was that the price of copper was rising to the point where these coins could be profitably melted for their metal content.^[53] In 1969, a similar law regarding silver coinage was repealed. Because their silver content frequently exceeds collector value, silver coins are often sold by multiplying their "face value" times a benchmark price that floats relative to the spot silver price per ounce.^[54] According to American law, US citizens are allowed to melt foreign coinage (e.g., Canadian pennies) for personal or commercial use; however, by doing so they are usually violating the laws of the country that issued the coinage in question.^[55][56]

See also

• Money portal
• Numismatics portal

• Debasement
• Gresham's law
• Inflation
• Inflationism
• Inflation hedge
• Metal theft
• Take a penny, leave a penny
• Withdrawal of low-denomination coins

Notes

1. Many other non-lowest denominations have since been withdrawn from circulation, from the two-cent coin in 1872 to the $10,000 bill in 1934; see Obsolete denominations of United States currency.