The U.S. Has Finally Ended One-Cent Coin Production

For more than two centuries, the penny has been part of everyday American life—jingling in pockets, collecting in drawers, and helping make exact change in countless transactions. But as of this year, the U.S. Mint has officially retired the one-cent coin—closing the book on a monetary tradition that began in 1793.

A Long History, A Quiet Ending

The U.S. penny has undergone many transformations—from its original Liberty design to the now-familiar image of President Abraham Lincoln. While its symbolism is deeply rooted in American history, its practical use has been steadily fading. Rising production costs, declining cash use, and the shrinking purchasing power of a single cent have all contributed to the decision to end its production.

Earlier this year, the Treasury Department announced it would no longer mint new pennies. A small ceremonial batch of five final coins was produced for auction, but regular production has officially ended. Those coins, marked with a subtle omega symbol, will never enter circulation.

Cost vs. Value

At the heart of the decision lies a simple economic reality: pennies cost more to make than they’re worth. Each coin costs approximately 3.7 cents to produce—largely due to metal prices and manufacturing costs. In recent years, the Mint produced billions of pennies annually, resulting in tens of millions of dollars in losses.

By eliminating the penny, the government is projected to save around $56 million each year. While relatively modest in the context of federal spending, the move reflects broader efforts to modernize the currency system and eliminate inefficiencies.

The Decline of Physical Currency

The end of the penny also reflects a broader trend: the steady decline of cash use. In 2023, only 16% of consumer payments in the U.S. were made with cash, down from 31% in 2016. As digital payments continue to gain traction, the need for physical coins—especially low-denomination ones—has diminished.

Despite an estimated 300 billion pennies still technically in circulation, most are not actively used. Today, many sit forgotten in jars or drawers, slowly disappearing from circulation—making the cost of keeping them in the system harder to justify.

The Challenges of a Penny-Free Economy

Phasing out the penny isn’t as simple as flipping a switch. It raises questions about how businesses will manage pricing, make changes, and remain compliant with existing laws. Rounding transactions to the nearest nickel may seem like a logical solution, but not all retailers can easily do so.

For example, stores participating in the Supplemental Nutrition Assistance Program (SNAP) are required to charge the exact price for goods—making rounding problematic. State sales tax rules can also interfere with clean pricing strategies, creating complexity for retailers.

Without clear federal legislation to authorize rounding practices, many businesses are in a holding pattern—caught between the disappearance of the penny and the lack of a clear alternative.

Learning from Other Countries

The U.S. is not the first country to retire its lowest-value coin. Canada phased out its penny in 2012 with a gradual rollout and clear rounding policies that allowed for a smooth transition. In contrast, the U.S. approach has been more abrupt, leading to logistical issues in some sectors.

Coin distribution centers have already started limiting penny orders, causing minor disruptions in high-volume cash environments like fast food restaurants and convenience stores. However, for most consumers, the change has been largely uneventful.

What Happens Now?

Pennies will remain legal tender, and consumers can still use them for purchases or exchange them at banks. But over time, their presence will fade. The shift away from pennies is part of a larger evolution in how Americans handle money—away from cash, and toward convenience, efficiency, and digital solutions.

At LMC, we help clients navigate the ripple effects of policy changes like this—whether they impact retail operations, pricing models, or broader business strategies. As the financial system continues to evolve, understanding how these shifts affect your organization can help you stay one step ahead.

If you have questions about how the retirement of the penny may influence your business, reach out to your LMC advisor.