Treasury Ends Penny Production in 2026 as Retailers Prepare for Gradual Cash Rounding

The U.S. Treasury Department has announced that it will begin phasing out production of the penny in early 2026, ending more than two centuries of minting the one-cent coin. Despite this move, the penny will remain legal tender and continue to be accepted at retailers across the country for the foreseeable future. This decision aligns with similar actions taken by other countries, such as Canada, which stopped producing pennies in 2012 while still recognizing them as valid currency.

Retailers Plan Smooth Transition as Pennies Circulate Widely but Remain Underused

Retailers are expected to continue accepting pennies even after the Treasury halts production. The National Retail Federation, representing a wide range of retailers, anticipates a gradual adjustment period during which stores will begin rounding cash transactions to the nearest nickel. However, this change will likely only occur once banks begin to run low on their penny supply. The main concern for retailers will be ensuring that the shift is seamless and customer-friendly.

Although production is ending, the U.S. currently has around 114 billion pennies in circulation. However, the Treasury notes that a large portion of these coins are not actively used, often left to collect dust in coin jars and drawers. Despite their abundance, pennies are increasingly overlooked by consumers, with many opting to discard them or leave them in “take-a-penny, leave-a-penny” trays at store counters.

Electronic Payments Unaffected, Retailers Prioritize Service During Penny Phase-Out Transition

While cash transactions may eventually be rounded to the nearest five cents, electronic payments will still be processed down to the penny. According to Jeff Lenard of the National Association of Convenience Stores, this ensures that card users won’t be affected by the penny’s phase-out. He also emphasized that the decision to round transactions will be left up to individual retailers, not enforced by federal policy.

Despite the shift in policy, customer service remains a top priority for retailers. Echoing the Canadian experience, U.S. retailers are expected to continue accepting pennies from customers who wish to use them. Lenard highlighted a common saying in retail—“Never lose a customer over a penny”—to illustrate how businesses are likely to prioritize customer satisfaction over strict adherence to rounding practices. In short, while the penny’s future is limited in terms of production, its role in everyday commerce is far from over.