After 232 years, the US is bidding farewell to the penny.
The US Treasury announced in May that it will start phasing out the production of its lowest-value coin.
According to the Trump administration, the reason for the decision was to save federal money, “one penny at a time.” In 2024, the US Mint reported that the pro- duction of every single penny cost the government 3.7 cents, almost four times its face value. All in all, to make
3.2 billion pennies last year, the federal government lost
$85.3 million. It estimates it can save $56 million a year just in production costs.
The penny will remain legal tender and will continue to be widely accepted across the country as long as people continue using cash. Last year, YouGov reported that cash remains “the most commonly used form of payment,” with 67% of Americans favoring it. But Capital One consumer statistics projects that about half of the US population will use no cash at all in 2025.
The one-cent coin is made of copper-plated zinc but was originally all copper. It has been in circulation since the US Mint was created in 1792. Lately, however, and despite the 114 billion currently in circulation, the Treasury says that pennies are “severely underutilized” and easily lost, thrown away, or abandoned in jars in people’s homes.
Officials expect that businesses will start rounding up to the nearest nickel—worth five cents—and gradually elimi- nate cents in cash transactions. But the transition may not be as uncomplicated as that.
“People using cash in stores are still entitled to their change,” notes Jay Zagorsky, senior lecturer in markets, pub- lic policy, and law at Boston University’s Questrom School of Business. “The problem with the decision to stop minting the penny is that it impacts only the supply of pennies, not the demand. This issue needs to be solved with an official national policy. The US Congress needs to pass a law in this regard.” The US is not the first country to abolish its smallest- denomination coins. The EU and Canada have been winding down their pennies for over a decade, while New Zealand and Australia stopped production more than 30 years ago, in 1990 and 1992, respectively.