The Push to Eliminate the Penny

With the Trump administration’s emphasis on saving taxpayers money and curtailing government waste, the debate over eliminating the penny has resurfaced with the recent directive to halt new penny production. Supporters see this as a cost-saving measure, while others worry about its impact on pricing and cash transactions.

The Rising Cost of Penny Production

Minting pennies is increasingly expensive. In 2024, nearly 3.2 billion pennies were produced. It cost 3.7 cents to produce a single penny—nearly four times its face value. The U.S. Mint lost $85.3 million last year from penny production alone. Pennies are made of zinc and copper, and rising material costs contribute to their inefficiency. Some lawmakers suggest changing the coin’s composition to cut costs.

Why Some Support Eliminating the Penny

• Cost Saving – Eliminating the penny entirely would save an estimated $250 million over the next decade.
• Shifting Payment Habits – Digital payments have reduced reliance on small-denomination coins. As cash transactions decline, the penny is becoming less relevant.
• Lost & Unused Change – Millions of dollars in pennies are discarded or forgotten each year.
• Other Countries Have Done It – Canada, Australia, and New Zealand have all phased out their one-cent coins with no major impact on inflation.

Concerns About Eliminating the Penny

Despite potential savings, some worry about unintended consequences:

• Price Rounding – Without pennies, many prices will be rounded up rather than down, increasing costs for consumers. Although most shoppers will not be affected by this, it will negatively affect low-income shoppers and can be a contributing factor to inflation.
• Increased Nickel Use – With pennies eliminated from our economy, there would be increased reliance on the nickel. As costly as it is for the mint to produce pennies, a nickel costs nearly 14 cents to produce, which mitigates any expected savings, especially if more nickels need to be produced.

How Would a Penny-Free Economy Work?

If the U.S. follows Canada’s model, pennies would slowly exit circulation, but they would retain their value. Key changes would include:

• Cash transactions rounded to the nearest nickel.
• Electronic payments still processed to the exact cent.
• Pennies could still be used but would no longer be produced.

Who Has the Authority to Eliminate the Penny?

Although the executive branch can influence coin production, only Congress has the authority to permanently eliminate the penny. The move to halt new penny production does not remove existing pennies from circulation but signals a possible shift toward phasing them out.

Looking Ahead

The future of the penny remains uncertain. While many view its elimination as a logical cost-saving measure, others have concerns that the elimination of the penny will have a negative effect on our economy and on cash transactions. Should the penny be phased out, one thing is certain – it will take time to adjust to saying  “A nickel for your thoughts”.