#pennyphaseout

The penny's days are officially numbered. In a move aimed at curbing unnecessary government spending, the U.S. Treasury Department has confirmed it will cease production of the one-cent coin, marking a significant shift in American currency policy.

According to Treasury officials, the final batch of penny blanks—metal discs used to mint the coins—has already been ordered. These will be the last newly minted pennies to enter circulation, expected to roll out in early 2026. Once current supplies are exhausted, businesses will begin rounding transactions to the nearest five cents.

Financial Impact and Rationale

Though the penny has long been a fixture of U.S. currency, it has become increasingly expensive to produce. In 2024, each coin cost 3.69 cents to mint—nearly four times its face value. Senator Mike Lee (R-Utah), a vocal supporter of the move, said, “No business would accept a 4x loss on any product. It's time we apply that same logic to government spending.”

By halting penny production, the government expects to save approximately $85 million annually. Of that, $56 million comes directly from reduced material costs, with the remainder saved through lower facility and processing expenses.

A Penny Problem Years in the Making

The composition of the penny has evolved over the years. Once primarily made of copper, the coin has since shifted to a zinc core with copper plating. Despite the change, costs have continued to rise. As of 2021, over 50% of the U.S. Mint’s coin output was still dedicated to penny production—a focus many economists have long questioned.

A 2022 Federal Reserve study warned that abruptly removing the penny could cause a rush of redemptions. It instead recommended a gradual phase-out to protect financial stability while capturing long-term savings, estimated at over $100 million.

Trump’s Push for Cost-Cutting

Former President Donald Trump, a long-time critic of wasteful federal expenditures, called for the penny's end earlier this year. “Every dollar matters,” he said in February. “Let’s rip the waste out of our nation’s budget—even if it’s a penny at a time.”

What’s Next for Consumers and Retailers?

The transition will likely push retailers to adjust pricing systems, rounding totals to the nearest nickel. Though electronic transactions will remain unaffected, cash purchases could see slight variations in total amounts.