U.S. Mint halts penny production, citing high costs and sparking retail uncertainty

The United States Mint officially ceased production of the one-cent coin on Wednesday, ending a more than two-century run for the nation’s lowest-denomination currency. The move, initiated by the Trump administration, cites unsustainable production costs as the primary driver, but has left retailers and consumers navigating an uncertain transition period marked by inconsistent rounding policies and emerging legal challenges.

An Official End to the Lincoln Cent

At a ceremony in the same city where the coin was first created, the U.S. Mint in Philadelphia struck its final penny on November 12, 2025. U.S. Treasurer Brandon Beach oversaw the event, pressing the last commemorative coins that will be auctioned rather than circulated. “Today, we retire the penny,” Derek Theurer, performing the duties of Deputy Secretary of the Treasury, announced at the event, as reported by ABC News.

The decision follows a February social media post from President Donald Trump instructing the Treasury Department to halt production of the coin. The administration has framed the move as a fiscally responsible one. “Given the rapid modernization of the American wallet, the Department of the Treasury and President Trump no longer believe the continued production of the penny is fiscally responsible or necessary to meet the demands of the American public,” Beach stated, according to The Washington Post.

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The economic argument against the penny has grown for years. According to the U.S. Treasury Department, the cost to produce and distribute a single penny has risen to 3.69 cents. This inefficiency led the U.S. Mint to report a loss of $85.3 million on penny production alone in fiscal year 2024, as noted in its annual report to Congress and cited by ABC News. Treasury officials have emphasized that while production has ended, the estimated 300 billion pennies already in existence will remain legal tender.

The history of the one-cent coin dates back to 1787 with the copper Fugio cents. The official one-cent piece first appeared in 1793, and Abraham Lincoln’s likeness was added in 1909, making it the first American coin to feature a president. The coin’s sibling, the half-cent, was discontinued in 1857, CNN reports, leaving the penny to outlive it by 168 years.

Retailers Grapple with Inconsistent Policies

With the supply of new pennies cut off, major retailers across the country have begun implementing varied strategies to handle cash transactions, leading to a patchwork of policies for consumers. The lack of federal guidance on how to manage pricing has forced businesses to create their own rules for rounding cash totals to the nearest five-cent increment.

McDonald’s informed CBS News that some of its locations will round cash totals to the nearest nickel. Under this system, a bill of $10.22 would be rounded down to $10.20, while a total of $10.23 would be rounded up to $10.25. The company confirmed that digital and card payments, which can be processed for exact amounts, will remain unaffected.

Other major brands are opting to absorb any potential extra cost to avoid charging customers more. Wendy’s told CBS News it has advised its restaurants to round cash transactions down to the nearest nickel. Similarly, GoTo Foods, the parent company of brands like Cinnabon and Jamba, is recommending its franchisees round cash transactions in the customer’s favor. The Midwestern convenience chain Kwik Trip has also adopted a policy of rounding down.

John McHugh, a spokesperson for Kwik Trip, explained the rationale to CNN, stating, “There’s no way that we wanted to charge (customers) an extra 2 cents because we just didn’t think that was fair.” However, he acknowledged that with 17% of the company’s 20 million annual customers paying with cash, this policy could eventually cost the company millions of dollars per year.

Meanwhile, some businesses are attempting to increase their own supply of existing pennies. Supermarket chain Kroger is asking customers to provide exact change when possible, according to CBS News. Other chains, like Giant Eagle and Sheetz, have offered promotions to encourage customers to exchange their pennies for gift cards or free items, hoping to collect enough coins to continue providing exact change.

Economic and Legal Complications Emerge

The transition away from the penny is proving to be more complex than simply adjusting prices at the register. The lack of a unified national plan has raised both economic concerns and significant legal questions for businesses. Mark Weller, executive director of the pro-penny group Americans for Common Cents, described the phase-out as “a bit chaotic” in an interview with CNN, noting that other countries that eliminated low-denomination coins provided clear guidance for retailers.

The economic impact on consumers remains a subject of debate. A July study from the Federal Reserve Bank of Richmond, cited by CNN, estimated that rounding prices to the nearest nickel could cost American consumers an aggregate of $6 million per year. While this averages out to only about five cents per household, it represents a small but tangible cost.

However, Robert Whaples, an economics professor at Wake Forest University, argues that rounding does not necessarily harm consumers. His 2007 study, referenced by The Washington Post, found that transactions were just as likely to be rounded down as up, resulting in a negligible impact on consumers. Whaples also pointed to the time cost associated with using pennies, noting that with the average private-sector wage at roughly one cent per second, fumbling for a coin is an inefficient use of time.

Beyond the economic debate, retailers face potential legal hurdles. According to the National Association of Convenience Stores (NACS), four states—Delaware, Connecticut, Michigan, and Oregon—as well as major cities like New York and Philadelphia have laws requiring merchants to provide exact change. Rounding up or down in these jurisdictions could expose businesses to legal trouble, CNN reported. Furthermore, federal laws governing the Supplemental Nutrition Assistance Program (SNAP) require that recipients not be charged more than other customers. If a retailer rounds down for cash but charges the exact, higher amount to a SNAP debit card, it could lead to legal challenges. In response, NACS and other retail groups have written to Congress requesting legislation to create a clear and legal framework for rounding.

Outlook: The Future of American Coinage

As the nation adapts to a future without the one-cent coin, the debate over its utility has largely been settled by economic reality. While many Americans hold nostalgic memories of the penny, its purchasing power has diminished to the point where, as Professor Whaples noted in The Washington Post, most people “won’t even reach down and pick up a penny we see on the sidewalk.” The coin’s primary function in recent decades has been to facilitate sales tax calculations, but its circulation has slowed dramatically as billions sit unused in jars and drawers.

The end of the penny may also signal further changes for U.S. currency. Economists are already pointing to the nickel as the next potential candidate for elimination. According to the U.S. Mint, it currently costs 13.78 cents to produce a single five-cent coin, making it even less cost-effective than the penny was. “If we get rid of the penny, we might as well get rid of the nickel,” said Gabriel Mathy, an associate professor of economics at American University, in a comment to The Washington Post.

For now, the immediate focus remains on navigating the logistical vacuum left by the penny’s departure. Without clear federal guidelines, businesses and consumers will continue to manage a fragmented system of rounding practices. The situation underscores the need for legislative action to standardize the transition and ensure fairness and clarity in cash transactions nationwide.