It’s official: a big change is coming to change in the U.S. After 233 years in production, the Treasury will stop minting pennies in 2026.
While the exact timeline is vague, the San Francisco Mint is no longer fulfilling requests for pennies.
Beyond nostalgia, you may have questions about how this change will impact your wallet, prices, and even inflation. We’ve got answers.
Why is the U.S. Treasury getting rid of the penny?
The quick answer: It costs more to make a penny than it’s worth — it has for the last 19 years — and pennies are underutilized.
Last fiscal year, making one penny cost 3.69 cents. In comparison, it costs less than six cents to make a dime and a bit less than 15 cents to make a quarter. The Treasury says it expects to see an annual savings of $56 million in reduced material costs.
Proponents of ending the penny also say it’ll make payments faster and easier – while pennies rarely get spent, they slow down cash transactions when used.
The U.S. wouldn’t be alone in this decision. Other countries, including Canada, Australia, New Zealand, and the Netherlands, eliminated their smallest coins in recent decades.
What should I expect when paying cash?
Most transactions in the U.S. are now done electronically using cards, or mobile or online payment options rather than physical cash. If you don’t often pay in cash you may not even realize pennies are being phased out.
However, people using cash will want to know what to expect.
One path is symmetric rounding – amounts ending in .01 and .02 will round down to .00. Those ending in .03 and .04 will round up to .05. Overall, this would be neutral, as some prices would go up and others would go down.
Some businesses may round up to the nearest nickel leading to a small change in pricing, which is sometimes called a rounding tax.
The practice of rounding was legalized in other countries where the smallest coin was discontinued. So the U.S. could implement similar guidelines — rounding the final cash total, not each item. If you wanted to pay the original price with a card or digital wallet and avoid rounding, you could.
Will prices overall go up?
States and the federal government set rules for fair pricing, and any rounding rules would be added to that framework. Since rounding is a neutral system (sometimes up, sometimes down) it’s not considered price manipulation.
It’s also helpful to remember that retailers will still compete on price. They shouldn’t suddenly raise costs on everything.
Again, we can look to other countries that have already eliminated their smallest coins. Consumers in those countries didn’t see a meaningful change in retail prices, so U.S. consumers shouldn’t either.
Will inflation go up?
No. Broad economic forces (labor costs, supply chains, interest rates) drive inflation, not tiny rounding rules.
Studies from Canada, Australia, and New Zealand — just a few of the countries that have discontinued their smallest coins — found no relationship between inflation trends and the removal of a nation’s smallest coins.
Will low income people be affected?
Lower-income households are more cash dependent, but they shouldn’t be more impacted by the elimination of the penny. Since price rounding goes both ways, the overall result is neutral — even for cash transactions.
SNAP/EBT transactions and other assistance programs like Social Security and unemployment insurance are electronic or involve direct deposit; thus benefits would be unaffected when pennies are retired. Even if a recipient withdraws cash for purchases, the rounding rule still applies neutrally. Sometimes a price would round up, sometimes down.
We have evidence from other countries to look to. Low-income households in Canada and Australia did not see a measurable impact when those countries retired their smallest coins.
What should I do with my pennies?
There are about 114 billion pennies currently in circulation. Yes, $1.14 billion worth of them! So they won’t disappear overnight.
Pennies will remain legal currency, so you can still use them. You can also take them to a bank for deposit, add them the next time you go to a coin-counting machine or drop them into collection boxes for charities.
You might save a few, too! Choose a few years of note — a child’s birth year, your anniversary, the oldest penny you can find — and keep them.
Why is it called a penny, anyway?
The official name, cent, comes from the Latin “centum,” meaning one hundred. The common term “penny” comes from the old English term for “coin.” The nickname carried over from the British penny colonists used to the one-cent coin the U.S. Mint first circulated in March 1793.