Penny supply pinched as production ends

A nickel for your thoughts?

That's just one of many questions businesses and consumers might ponder as the country adapts to the demise of the penny.

The U.S. Mint produced its last batch of pennies – composed of 97.5 percent zinc and 2.5 percent copper – in November, ending a 232-year run.

Businesses that want pennies on hand for making change are already finding them difficult to obtain because many Federal Reserve bank offices are no longer fulfilling penny orders for banks due to insufficient inventory. Many banks, in turn, have limited the number of pennies a person or business can get.

An estimated 300 billion pennies are in circulation, according to the U.S. Mint (the U.S. Treasury puts the number at 114 billion). In a press release at the time production was winding down, the Mint said the number of circulating pennies far exceeds "the amount needed for commerce. Retailers and other businesses can continue to price goods and services in one-cent increments."

But many pennies are sitting idle in the hands of the public, or in forgotten stashes in jars or junk drawers, leaving retailers scrambling for change. Some stores and restaurants are setting their own policies to forego the penny and round transaction totals to the nearest five cents.

Round up or down?

The National Retail Federation is pushing for federal legislation to establish clear guidance for retailers on how to handle cash transactions without pennies. The organization says there is an environment of uncertainty around what is permissible under federal, state and local laws.

Currently, retailers and other businesses have only recommendations rather than concrete rules to guide their handling of cash transactions.

"This has led to many retailers implementing policies to always round cash transactions in the customers' favor, losing up to four cents per transaction," the retail coalition said in a public statement. "While that might not seem like much, the extra change adds up over tens of thousands of transactions. The lack of federal guidance also exposes retailers and stores to legal and compliance risks tied to rounding practices."

In some jurisdictions, according to the NRF, it is illegal to round cash transactions because it violates a requirement to treat all customers the same, regardless of the form of payment.

Equal treatment requirements also come into play with federal programs such as the Supplemental Nutrition Assistance Program (food stamps), the NRF said.

And retailers have other questions, such as whether to round on a cash refund.

One certainty is that pennies remain legal tender indefinitely: The U.S. Treasury says consumers should continue to spend them; businesses should continue to accept them; and businesses and consumers may continue to deposit them at their financial institutions.

The Treasury advises that retailers should provide penny change for cash transactions while the coin remains in circulation. If pennies are not available, the business may round the final amount of a cash transaction to the nearest five-cent increment, "recognizing that states will approach this issue differently based on unique considerations," the Treasury says.

The Treasury points to guidance from the National Council of State Legislators that found the most recommended form of rounding to be "symmetrical rounding," wherein 1, 2, 6 or 7 cents is rounded down to the nearest multiple of 5, and totals ending in 3, 4, 8 or 9 cents is rounded up to the nearest multiple of 5. The U.S. Postal Service implemented this type of rounding on Dec. 12 for cash transactions when pennies are unavailable.

The Treasury recommends non-cash transactions continue to be priced to the exact cent.

Penny history

Over the last 10 years, the U.S. Mint says the production cost of the penny rose from 1.42 cents to 3.69 cents each, and immediate annual savings of $56 million in reduced material costs is projected by ending penny production.

With the increase in non-cash transactions and the very low purchasing power of a single penny, the Department of the Treasury "does not believe continued production is fiscally responsible or necessary to meet the needs of commerce in the United States," the Treasury said in a recent public statement.

In fiscal 2024, the U.S. Mint produced about 3.2 billion pennies. That number accounted for 57 percent of the total circulating coin production of 5.61 billion coins during the year.

The 2025 penny features the profile of President Abraham Lincoln on the front, where he has been pictured since 1909, when Lincoln was added to commemorate his 100th birthday. The union shield appears on the reverse and has been on the "tails" side since 2010.

The face of the original 1793 penny, a larger copper coin, was a woman with flowing hair, a symbol of liberty. Various liberty designs appeared on the front through 1857, followed by a flying eagle with wreath in 1857 and 1858, and an Indian head from 1859 to 1909.

The reverse featured the "wheat penny" design from 1909 to 1958 and the Lincoln Memorial from 1959 to 2008. The Lincoln bicentennial reverse had four unique designs in 2009.

The penny's metallic composition has changed a number of times through the years with the last being in 1982, when it shifted from 95 percent copper to 97.5 percent zinc.

The U.S. Mint will continue to produce occasional versions of the penny for the collector market.