The U.S. penny will be discontinued. The Treasury Department announced on May 22, 2025, that it would stop producing the cent coin in 2026. It will remain in circulation as legal tender for the time being. The cent has been a fixture in American coinage since the introduction of large cents in 1793 and has borne Abraham Lincoln’s profile since 1909.
Who Led the Charge to Eliminate the Penny?
The initiative to eliminate the penny culminated when Congressman Robert Garcia and Congresswoman Lisa McClain introduced the Common Cents Act. This bipartisan legislation proposed halting penny production and implementing rounding practices for cash transactions. Their efforts were supported by long-standing research from the Government Accountability Office and the U.S. Treasury Department, both of which had highlighted the penny’s financial inefficiency.
The President accelerated the process by directing the Treasury Secretary to end production, citing rising costs and minimal utility.
The Decision-Making Process and Feasibility Studies
The idea of retiring the penny is not new, and reports dating to the 1990s analyzed the impact of such a move on consumers, businesses, and federal costs. Internal U.S. Mint evaluations revealed that eliminating the coin would save about $56 million annually and the accumulated findings supported a policy aimed at modernizing U.S. currency.
The Economics of Penny Production
Seigniorage and the Cost of Minting
Seigniorage is the difference between a coin’s face value and production cost. For years, the penny incurred negative seigniorage, meaning it cost more to produce than it was worth. As of the time of this article, June 2025, the cost to make an American penny is about 3.69 cents.
Declining Use and Changing Payment Habits
With the proliferation of mobile payments, credit cards, and digital wallets, cash usage has steadily declined. This trend is pronounced among younger demographics and urban populations, where pennies are increasingly viewed as cumbersome.
How Many Nations Retired Their One Cent Coin?
Australia retired their one cent coin in 1992 and Canada successfully retired their one-cent coins in 1992 and 2013, respectively. Both nations reported smooth transitions with little consumer backlash and are not alone. New Zealand, Brazil, Finland, and the Netherlands are among the countries that have eliminated their one-cent or lowest-denomination coin.
Consumer and Business Impact
Retailers must now train staff, update point-of-sale systems, and modify pricing structures. Many businesses are expected to revise pricing strategies to simplify rounding and reduce confusion. This might include pricing items closer to five-cent intervals or offering bundled discounts to avoid fractional totals.
Another area of concern is charitable donations. Coin-based giving, especially via donation jars at registers, may decline, prompting nonprofits to explore digital alternatives.
Impact on Americans
The discontinuation of the penny will have varying effects across different communities. Urban areas, where digital payments dominate, will experience minimal disruption, while communities with limited banking access who rely heavily on cash transactions may face challenges adjusting to rounding practices. Studies indicate that low-income Americans and older demographics use cash more frequently, raising concerns about fairness in pricing adjustments.
Data on Where Cash Reliance Is Still High
Cash reliance remains significant in specific regions and demographics. Federal Reserve data shows that cash accounts for 16% of all payments, with usage higher among individuals over 55 and lower-income groups. Additionally, international studies highlight that countries with high unbanked populations tend to rely more on cash, suggesting that similar trends may apply within the U.S. Areas with fewer ATMs and banking infrastructure may experience greater initial difficulty transitioning away from pennies.
Historical and Global Precedents
The U.S. has retired coins before, such as the half-cent in 1857 and the two-cent piece in 1873. These changes were similarly driven by declining purchasing power and practicality. In both cases, the economy adapted without long-term disruption.
Impact on Numismatics and Collectors
With the end of new penny production, interest in rare editions and historical Lincoln wheat pennies is expected to rise. Collectors may first see value increases in low-mintage years or error coins first.
The Future of U.S. Coinage
The penny’s discontinuation raises questions about the fate of other low-value coins, particularly the five-cent nickel, which also costs more to produce than its face value. Analysts predict a gradual shift toward a leaner, more efficient currency system further propelled by cashless technologies.
The penny’s retirement marks a defining moment for U.S. numismatics, signaling a shift from everyday currency to historical artifact and closing a long chapter in American currency.
