The End of the Penny

The last U.S. penny was born in Philadelphia on November 12, 2025.
It rolled off the press like billions before it, Lincoln’s profile gleaming for a moment under fluorescent lights, before officials scooped it up for a ceremonial photo. Then the presses stopped. After more than 230 years, the penny’s run as America’s smallest workhorse of money was over.

The decision wasn’t really about nostalgia. It was about math.

Producing a one-cent coin had quietly turned into a four-cent problem. By 2024, it cost roughly 3.69 cents to mint and distribute each new penny. That meant taxpayers were shelling out more than three cents in raw materials, labor, and logistics for every one cent of face value the coin carried.

Ending penny production is expected to save the U.S. Mint on the order of $50–85 million a year, depending on coin demand — and that’s before counting broader savings across banks, retailers, and the Federal Reserve.

This article dives into the full story behind those savings: how the penny became an economic dead weight, what other countries learned when they scrapped their lowest-denomination coins, why fears about “rounding inflation” are mostly overblown, and what everyday life looks like when the smallest coin disappears.

1. How a one-cent coin became a four-cent headache

For most of American history, the penny made sense. In 1900, one cent could buy what roughly 30–35 cents buys today; a penny candy or a newspaper headline wasn’t just a figure of speech. As long as the coin’s buying power lined up with its cost to produce, nobody worried much about the economics.

That balance broke a long time ago.

1.1 The cost spiral

The penny’s problem is simple: it’s made of real stuff in a world where stuff got more expensive.

• Modern U.S. pennies are mostly zinc with a thin copper plating.

• Metals, energy, transport, and labor costs have all risen.

• At the same time, a cent’s purchasing power has shrunk dramatically due to inflation.

According to the U.S. Mint, the cost to produce and distribute a penny climbed from about 1.42 cents a decade ago to 3.69 cents in the most recent estimates — a roughly 160% jump.

And this wasn’t a one-off spike. The Mint has reported for 19 consecutive years that both pennies and nickels cost more to make than they’re worth.

In 2024 alone:

• The Mint produced roughly 3.2 billion pennies.

• At a cost of 3.69 cents each, that implied more than $85 million in losses just on the difference between production cost and face value.

That’s money that, in principle, could have gone to anything from infrastructure to tax relief instead of subsidizing a coin most people literally don’t bother to pick up off the ground.

1.2 The volume problem

Pennies are not a niche product. Until the shutdown, they were:

• More than half of all coins the Mint shipped in 2024 — about 57% of circulating coin production.

• Produced by the billions, year after year, even as demand for cash transactions fell in a card-and-phone dominated world.

Because pennies don’t circulate well — people stash them in jars, cars, couch cushions — the Mint had to keep replacing them just to keep registers stocked. A Government Accountability Office (GAO) review in the 1990s already noted that about two-thirds of pennies dropped out of active circulation in their first year, compared with only about 12% of quarters.

In other words, the country was minting mountains of coins that mostly went straight into hibernation.

2. The hidden costs no one sees on a receipt

The Mint’s negative “profit” on each penny is just the visible top of the iceberg. Below the surface is a long chain of small, persistent costs spread across the entire payment system.

2.1 Handling and logistics

Every penny has to be:

• Counted and rolled.

• Shipped between Federal Reserve banks, commercial banks, armored carriers, and retailers.

• Stored in vaults, cash drawers, and back rooms.

Even in the 1990s, the GAO estimated that distributing and handling pennies cost between $8.5 and $9.2 million a year in government logistics alone, not counting private-sector costs.

Fast-forward to a more complex, more expensive logistics landscape, and those numbers are almost certainly much higher today.

2.2 The “time tax” at the register

Then there’s the time factor. Pennies slow down the simplest transaction:

• The cashier counts out exact change, coin by coin.

• The customer fiddles with a small pile of copper-colored discs.

• The line waits.

A second here and there doesn’t sound like much, but scale it up:

• Assume eliminating pennies saves even two seconds per cash transaction on average.

• Multiply by billions of cash transactions a year.

• Hours turn into millions of person-hours reclaimed from pure friction.

Economists who have tried to quantify this “time tax” argue that, once you put a dollar value on people’s time, the social cost of keeping pennies easily runs into tens or hundreds of millions annually.

None of that shows up on your receipt — but it’s real.

2.3 Bank and retailer overhead

Banks and retailers must:

• Maintain coin-counting machines and purchase rolling supplies.

• Order and store heavy boxes of low-value coins.

• Manage staff time spent dealing with coin shortages and surpluses.

During the coin circulation issues of the early 2020s, financial industry groups pointed out that low-denomination coins like the penny create disproportionate headaches relative to their usefulness. After the 2025 decision, the American Bankers Association explicitly welcomed the reduced burden from penny production winding down.

Put bluntly: everyone in the payment chain was doing extra work to support a coin that hardly anyone needed.

3. When seigniorage turns negative

To understand why killing the penny saves so much money, you have to talk about seigniorage — the difference between the face value of money and the cost of making it.

3.1 How seigniorage normally works

If it costs a mint 10 cents to produce a quarter that’s worth 25 cents at face value:

• The mint collects 25 cents from banks.

• It spends 10 cents to produce the coin.

• The 15-cent difference is seigniorage revenue, which ultimately benefits the government’s bottom line.

For many denominations, this seigniorage is a quiet but real source of income.

3.2 The penny: from asset to liability

The penny flipped that logic on its head.

• When it costs 3.69 cents to make 1 cent of face value, every new penny creates a net loss of 2.69 cents.

• Multiply that by billions of coins, and you get the tens of millions in annual “negative seigniorage” that drove the decision to halt production.

Economists and policy analysts had been flagging this for years. A 2024 analysis, for example, highlighted that penny and nickel production had cost the Treasury hundreds of millions of dollars over the last two decades as metal prices rose and coin demand stayed high.

Ending penny production doesn’t magically recover that sunk cost, but it stops the bleeding. Going forward, that negative seigniorage disappears from the balance sheet.

4. Other countries scrapped their pennies — and nothing exploded

The U.S. is late to this party. By the time the Philadelphia Mint pressed its last penny in 2025, dozens of countries had already pulled their own low-value coins from circulation.

4.1 Canada’s 2012 experiment

Canada is the closest real-world lab for what happens after a penny dies:

• In 2012, the Canadian government announced it would eliminate the one-cent coin.

• The final penny was minted that year; distribution ended in early 2013.

• Cash transactions began using rounding to the nearest 5 cents (a form of “Swedish rounding”).

Key outcomes:

• No measurable inflation spike attributable to penny elimination.

• Rounding rules were symmetrical (prices ending in 1–2 or 6–7 cents round down; 3–4 or 8–9 cents round up), which kept the system fair.

• After a brief adjustment period, most Canadians barely noticed the change; many had already been largely cashless in everyday life.

4.2 Australia and New Zealand

Australia and New Zealand went even earlier:

• Australia removed its 1- and 2-cent coins from circulation in the early 1990s.

• New Zealand pulled 1- and 2-cent coins in 1990 and later killed the 5-cent coin in 2006.

As in Canada:

• Cash payments began using rounding.

• Studies and central bank commentary found little to no evidence of retailers exploiting rounding to drive up prices overall.

4.3 The Eurozone and others

Even within the euro area, some countries have quietly drifted away from low-value coins:

• Finland, Ireland, and the Netherlands have largely stopped using 1- and 2-cent coins in everyday commerce and rely on rounding instead, even though the coins remain legal tender.

The global pattern is clear: once a coin’s purchasing power shrinks below a practical level and its production cost rises, countries either:

• Keep it nominally legal but stop minting more, and/or

• Move to rounding systems that make the smallest coin unnecessary.

The U.S. in 2025 is basically joining a long-running trend.

5. The rounding question: will prices quietly creep up?

Whenever penny elimination is discussed, one fear comes up fast:

“If we round prices, won’t businesses use that to sneak in higher prices — especially hurting low-income, cash-reliant households?”

It’s a reasonable worry. But the evidence so far suggests the effect is tiny.

5.1 How rounding actually works

The U.S. Treasury and many state-level proposals have converged on a simple cash-only rule:

• Electronic payments (cards, apps, online) still pay the exact amount.

• Only cash transactions are rounded to the nearest 5 cents, typically using rules like:

  • 1–2 cents → round down

  • 3–4 cents → round up

  • 6–7 cents → round down

  • 8–9 cents → round up

This symmetry is crucial. Over many transactions, the ups and downs tend to cancel out.

5.2 What the research says

Economists have actually tested this, using real-world receipts and simulations.

• A classic U.S. study by economist Robert Whaples found that eliminating 1- and 5-cent coins with symmetric rounding would have an impact on consumer prices that was statistically indistinguishable from zero — if anything, slightly negative.

• A 2018 analysis from the Bank of England’s research blog, looking at international evidence, similarly concluded that removing low-denomination coins did not trigger meaningful inflation.

• A 2025 Federal Reserve Bank of Richmond brief estimated that the annual “rounding tax” from eliminating the penny in the U.S. would be quite modest compared to the Treasury’s losses from producing it. By contrast, eliminating the nickel as well would have a larger impact on frequent cash users.

The overall takeaway: rounding has an effect, but it’s small, and the public savings from ending penny production are much larger.

5.3 Who actually feels it?

Two groups have reason to care most:

1. People who primarily use cash, especially for small purchases.

2. Very small businesses that operate heavily in cash and might need to update price tags or point-of-sale systems.

Even for them, the combination of:

• Symmetric rounding rules,

• Competition between retailers, and

• The growing dominance of exact electronic payments

means the net impact is likely to be measured in cents per year, per person, not dollars.

Opponents of penny elimination raise an important equity concern — but available data suggests it’s outweighed by the very real, very concrete savings on the government’s side.

6. Why did the penny survive so long?

If the economics were this bad, you might wonder: why did the penny last into the mid-2020s at all?

The answer is part politics, part psychology, part lobbying.

6.1 The emotional pull of “a piece of Lincoln”

Coins aren’t just metal. They carry symbols:

• The U.S. penny has featured Abraham Lincoln since 1909.

• For many Americans, the image feels like a tiny piece of national heritage.

• Phrases like “a penny saved is a penny earned” and “pennies from heaven” embed the coin in everyday language.

Surveys over the years consistently found that a majority of the U.S. public opposed eliminating the penny, even as they admitted they rarely used it.

Politicians generally don’t love picking fights with something:

• Widely recognized

• Mildly beloved

• Strongly associated with a revered president

So inertia ruled.

6.2 The zinc industry and organized lobbying

There’s also a more tangible interest: zinc.

Modern pennies are over 95% zinc by weight. Ending penny production means:

• A sharp drop in demand for zinc coin blanks.

• Lost revenue for specialized suppliers.

Those suppliers didn’t just sit quietly. Organizations such as Americans for Common Cents, which has historical ties to the zinc industry, campaigned vigorously to keep the penny, funding studies arguing that eliminating it would cost consumers via rounding and underestimating the Mint’s fixed costs.

On the other side, economists and some policy groups kept highlighting:

• Negative seigniorage

• Time costs

• International experience

But for years, emotional and industrial arguments were enough to stall reform.

6.3 Charities and “penny drives”

Charities also had mixed feelings:

• Some benefited from penny-collection campaigns, where schools or workplaces filled jars for donations.

• Pro-penny advocates often pointed to these drives as evidence that pennies still “do good.”

Critics countered that:

• People would happily donate nickels or dimes instead.

• Eliminating pennies might actually boost donations if people cleaned out jars of accumulated coins before the transition.

In short, the penny survived because a coalition of nostalgia, industry, and vague public support outweighed the invisible math — until the math got too big to ignore.

7. The 2025 break: how the U.S. finally pulled the plug

By 2025, the arguments against the penny had been piling up for decades. What changed was political will.

7.1 The Trump directive

In early 2025, President Donald Trump’s administration directed the Treasury to halt production of the one-cent coin, citing:

• Rising production costs (3.69 cents per penny).

• The coin’s limited usefulness in a digital, high-inflation environment.

Treasury officials later estimated that stopping penny production would save around $56 million annually for the Mint, a figure widely reported by major outlets.

On November 12, 2025:

• The last circulating penny was struck at the Philadelphia Mint.

• Senior officials, including the Treasurer, attended a ceremony marking the end of more than 230 years of continuous penny production.

7.2 Still legal tender — for now

Crucially, Treasury did not “kill” the penny as a legal form of money. Under U.S. law:

• Only Congress can demonetize a coin or declare it no longer legal tender.

• Treasury can, however, decide that the Mint no longer needs to produce new coins to meet the needs of commerce.

So:

• Existing pennies — roughly hundreds of billions of them — remain valid for payments and debt settlement.

• Banks will continue to accept and recirculate them as long as there is demand.

• Over time, as pennies are lost, damaged, or hoarded, they’ll naturally fade from day-to-day use.

In parallel, Treasury has signaled support for rounding cash transactions to the nearest five cents, mirroring systems used abroad. Proposed legislation such as versions of the “Common Cents Act” aim to formalize that rounding framework.

7.3 Collectors’ issues and the last pennies

To mark the transition:

• A handful of commemorative final pennies were struck for auction and collectors.

• Some of these are expected to fetch very high prices, transforming the ultimate “small change” coin into a high-end collectible.

It’s a neat irony: in death, the penny finally becomes rare.

8. The environmental angle: small coins, big footprint

While the financial case is the headline, there’s also an environmental subplot.

8.1 Mining and materials

Every new penny requires:

• Zinc mining and refining

• Copper for plating

• Energy for smelting, pressing, and transport

Over billions of coins, that adds up to:

• Significant metal demand for a product that many people don’t actually use.

• Additional energy consumption and associated emissions for a largely redundant output.

Earlier government reviews found no acute environmental hazards specifically from discarded pennies, but they did note that households literally throw coins away — millions of them collectively — which is a pure waste of mined material.

Ending penny production doesn’t transform climate policy, but it does remove a small, persistent source of resource use with vanishing social benefit.

8.2 Fewer coins in circulation overall

As coins become less central to payments, there’s a broader sustainability gain:

• Fewer trucks hauling coins between mints, banks, and retailers.

• Less demand for new coinage across all denominations if overall cash use continues to decline.

The penny’s elimination fits into this longer-term shift toward a leaner physical currency system that better reflects actual behavior.

9. Day-to-day life without new pennies

So what does all this look like from the average person’s perspective?

9.1 At the checkout counter

If you mostly pay with cards or your phone:

• Nothing changes.

• You’ll still see prices like $4.99 or $7.03, and your payment will be charged to the cent.

If you pay in cash:

• Your final total will be rounded to the nearest nickel.

• That rounding is done on the basket total, not each individual item, to avoid compounding effects.

Example:

• Your pre-tax total is $9.98.

• Sales tax brings it to $10.01.

• Paying in cash, the register rounds that to $10.00; paying by card, you’re charged $10.01.

Over time, you might find that some days you “win” a cent or two, other days you “lose” it.

9.2 For businesses

Retailers and small businesses need to:

• Update point-of-sale software to handle rounding logic for cash.

• Train staff to explain the rules if customers ask.

• Decide whether to adjust posted prices (for example, moving from $9.99 to $9.95 or $10.00 for simplicity).

Countries that have already made this shift report that the learning curve is real but short. After a few weeks:

• Most customers don’t think about the old coin.

• Staff handle rounding as just another register function, like applying a discount or adding tax.

9.3 What happens to all the jars of pennies?

Households across the U.S. have billions of pennies sitting in:

• Jars and piggy banks

• Drawers

• Cars and couch cushions

With production halted but pennies still legal:

• Banks will continue to accept deposits of pennies.

• Coin counting machines may see a short-term surge as people convert boxes of accumulated change into spendable money.

• Charities may run “last penny drive” campaigns to capture some of that dormant value before public interest fades.

Eventually, the Mint will melt worn-out pennies down for metal, closing the loop on at least part of the material cycle.

10. Is the nickel next?

Once you accept the logic that a coin which costs more than face value to produce is a problem, the next suspect is obvious: the nickel.

According to recent Mint data:

• It costs roughly 13.78 cents to produce a 5-cent coin.

• That means each nickel creates an even bigger negative seigniorage than the penny, in absolute terms.

Economists and central bank researchers have already flagged the possibility that the U.S. might eventually:

• Redesign the nickel to use cheaper materials, or

• Eliminate it and move to 10-cent minimum rounding for cash.

The 2025 Richmond Fed brief warns that eliminating the nickel would impose a larger rounding burden on cash users than eliminating the penny, because the gap between denominations becomes more meaningful.

Politically, the penny is an easier target:

• It has less practical use.

• It carries less purchasing power.

• It suffers from a stronger “nuisance coin” reputation.

But now that the taboo of killing a long-standing coin is broken, further denomination reforms become easier to imagine.

11. The deeper lesson: updating money for a digital age

At its core, the end of the penny is less about coins and more about alignment:

• Aligning physical money with actual buying power.

• Aligning government spending with rational priorities.

• Aligning payment infrastructure with how people already pay.

11.1 Cash is shrinking, but not dead

Digital payments have surged:

• Contactless cards

• Mobile wallets

• Online commerce

But cash is still important:

• For small transactions

• For people who are unbanked or underbanked

• As a backup in outages or emergencies

Ending penny production doesn’t kill cash; it just streamlines it.

11.2 Symbols versus systems

The penny was always more than a coin:

• It symbolized thrift, Lincoln, and continuity.

• It appeared in idioms, songs, and culture.

Ending its production illustrates a recurring policy tension:

At what point do we let go of a cherished symbol when it stops making sense for the system?

Here, decades of quietly compounding costs finally outweighed tradition. The fact that other countries had already navigated the same choice without chaos probably gave U.S. policymakers additional confidence.

11.3 A small but meaningful budget win

No one is claiming that saving $50–80 million a year will single-handedly solve deficits. It’s a rounding error in the federal budget.

But it’s a clean, non-painful saving:

• No benefits cut.

• No taxes raised.

• No services reduced.

Just a decision to stop paying three to four cents for the privilege of producing one cent of value.

In a government budget full of hard trade-offs, the penny was low-hanging fruit.

Conclusion: The end of the penny, and what it says about us

When historians look back at the end of the U.S. penny, they probably won’t treat it as a grand turning point. Coins come and go. Denominations rise and fall. Inflation erodes old habits.

But the logic behind the decision will matter:

• A careful accounting of costs that had become hard to ignore.

• Decades of evidence from other countries showing that life goes on just fine without the smallest coin.

• Recognition that public nostalgia, though real, doesn’t always justify perpetual spending.

Stopping penny production doesn’t just save tens of millions of dollars a year. It sends a quiet signal about how a modern economy should operate:

• Don’t cling to legacy systems solely because they’re familiar.

• Don’t ignore small, persistent inefficiencies just because they’re individually tiny.

• Do adapt institutions — including money itself — to the reality of how people live, work, and pay today.

For now, the pennies already out in the world will keep rattling in jars and pockets, a reminder of an era when one cent mattered more.

But no new ones will be born. And for the U.S. taxpayer, that’s one piece of loose change that finally adds up.