Pennies, Policy, and Poor Planning: How the Government Botched a Simple Change

When the U.S. Mint announced it would stop producing new pennies, the idea sounded straightforward enough. After all, it costs almost three cents to make a one-cent coin. Ending production should have been a win for efficiency and common sense.

Instead it triggered the kind of headlines usually reserved for major economic upheavals.

Businesses warned they could lose millions.
Consumers worried about unfair rounding.
Social media, as usual, added a dash of outrage.

What should have been a smooth modernization turned into confusion at the cash register. Businesses are unsure how to round totals, states have conflicting rules, and consumers are getting mixed signals about whether they’re being short-changed or over-charged.

But take a step back, breathe, and look at the bigger picture — the end of the penny isn’t the financial apocalypse some people make it out to be. In fact, it’s one of the most overblown stories in recent memory.

Let’s get real about what’s actually happening, and what really deserves our attention.

The Penny Was Already a Problem

Even before production stopped, the penny had lost nearly all practical value.
It costs about 2.7¢ to produce a 1¢ coin, thanks to rising metal and labor costs.
That means for every new penny, the government was losing roughly 1.7¢ right out of the gate.

If a business sold a $1 item for 37¢, everyone would call it bad math. Yet that’s how we’ve been minting money for years.

So ending production is simply a long-overdue cost correction — not a cash grab, not a political statement, and certainly not a conspiracy. It’s the government finally admitting what economists have been saying for decades: the penny’s time has passed.

The U.S. Mint Still Makes a Profit

Here’s where the media tends to oversimplify. Yes, the Mint “loses money” making pennies, but it’s not losing money overall.

The Mint is a self-funded agency. It earns revenue by:

Selling coins to the Federal Reserve at face value (a process called seigniorage),
Selling collectible and commemorative coins at a profit,
Running profitable gold and silver bullion programs,
And offering high-margin proof sets for collectors.

Those sales more than offset the cost of making low-value coins.
In other words, the Mint loses a few cents per penny, but makes it back many times over elsewhere. It’s like a store that offers a sale on milk to bring customers in, a classic loss leader move that works.

So no, the government isn’t going broke because of the penny. The debate is about efficiency, not solvency.

Where the Plan Fell Apart

In the U.S., the Treasury stopped production first and figured the details would sort themselves out later. That left retailers and state revenue departments scrambling to interpret how cash totals should be handled.

Some states already have consumer-protection laws that prohibit rounding up on cash transactions, arguing it’s an unfair charge. Others have no law at all, forcing businesses to guess which direction is safest.

Large chains with compliance departments are rounding down across the board to avoid legal exposure — a decision that costs them millions collectively each year.

According to the Associated Press, many retailers are “rounding down every cash transaction to the nearest nickel” because rounding up could violate state consumer laws, a policy “expected to cost companies millions annually.” (Associated Press, May 22, 2025, Banks and retailers run short on pennies as the U.S. Mint stops making them.)

Sales-Tax Systems Still Operate by the Penny

At the heart of the chaos is the way sales-tax systems are written. Every state that collects sales tax requires the tax to be calculated and remitted to the penny.
Point-of-sale software, accounting programs, and state validation databases are all built on that assumption. Rounding totals to the nearest five cents throws the math off. Even a one-cent difference can flag a compliance error when businesses file returns.

That creates a nightmare for multi-state retailers. A chain with stores in Tennessee, Georgia, and North Carolina now has to program three different rounding behaviors while still reporting uniform sales tax.
It’s a small-change issue that adds up to real administrative cost.

The Legal Patchwork Problem

Without federal guidance, every state can interpret the penny phaseout differently. That means one store might be required to round down, while the same store a few miles away across the border can legally round to the nearest five cents.
For national brands, that inconsistency is expensive. For independent shops, it’s confusing.

It’s also ripe for lawsuits. A customer who notices a single receipt rounded up could claim a violation of consumer-protection law, even if the intent was simply to balance the register. Many companies are now over-compensating by rounding down on all cash transactions, accepting the loss as the price of legal safety.

Lessons from Canada’s Playbook

When Canada retired its penny in 2012, it spent months preparing the public and the business community. The government issued a nationwide rounding policy that required cash transactions to be rounded to the nearest five cents — up or down — while electronic payments continued to the exact cent.
Retailers updated their systems, tax agencies aligned their rules, and the transition went so smoothly that Canadians barely noticed.

That’s what coordinated governance looks like.

In contrast, the U.S. approach feels like an afterthought — a decision made in Washington without consulting the people who actually handle money every day.

Businesses Can Adapt — Easily

Some companies are complaining that rounding down on cash purchases could cost them millions. Technically, that’s true — but only on paper, and only for a small fraction of transactions.

Cash payments now account for less than 15% of retail purchases in the U.S.
Even if a store lost an average of two cents on every cash sale, it would take tens of millions of in-person purchases to add up to a few million dollars in rounding losses. For large chains, that’s a manageable line item — not a crisis.

And for everyone else? It’s nearly invisible.

Smart retailers can — and will — adjust. They can tweak prices slightly, just like they do for shipping costs, credit card fees, or energy surcharges. If a cup of coffee quietly goes from $1.95 to $1.97, no one’s going to riot in the streets.

For Most People, It Doesn’t Change a Thing

If you’re using cash, the occasional few-cent difference might seem odd at first, but it will balance out over time. Round down one day, round up the next.

If you’re using a debit or credit card — which is how most Americans pay — you won’t notice any difference at all. Digital payments still process to the exact cent.

In short: the only thing disappearing is the little copper coin that most of us already ignore, toss in a jar or tell the cashier to “keep the change.”

A Penniless Solution

The fix is simple:

Establish a single federal rounding standard — round cash totals to the nearest five cents, up or down, across all 50 states.
Amend sales-tax collection rules so totals can legally reconcile to nickel increments without penalty.
Communicate clearly with both businesses and consumers before implementation.

If other developed nations can manage that transition smoothly, there’s no reason the U.S. can’t — except bureaucratic inertia.

The Real Issue: The Dollar’s Decline

Here’s where perspective matters.
People aren’t really upset about losing the penny, they’re reacting to what it represents: the shrinking value of our money.

A penny once meant something.
In 1913, when the Federal Reserve was created, a penny had about the same buying power as 30¢ today. Now, it barely buys a thought.

That’s not the Mint’s fault. That’s the effect of inflation and fiat currency; money not backed by gold, silver, or any physical asset, only by government trust and policy.

So the real question isn’t “Why did they end the penny?”
It’s “How did our dollar lose so much value that a penny became meaningless?”

That’s the kind of conversation worth having.

My 2 Cents Worth

Ending the penny is a smart logistical move — but it’s also a reminder of how easily we get distracted by the wrong financial battles.

The truth is:

Consumers won’t lose money.
Businesses can adjust prices.
The government saves resources.

Meanwhile, the real threat to our wallets — inflation and debt-driven currency devaluation — continues quietly in the background. That’s where our energy should go.

So the next time someone says, “They’re taking away our pennies!”
You can remind them:

“The penny didn’t fail. The dollar did — slowly, and with our full permission.”

Leave a penny, take a penny.

In the grand scheme of things, the disappearance of the penny is trivial. What really matters is understanding how value erodes — not just in coins, but in our money system as a whole.

Don’t get distracted by small change. Pay attention to what’s changing behind the change (pun intended).

The penny may be gone, but your earning potential isn’t.
If you’re ready to turn small change into real value
without bugging friends and family
explore the opportunity below.