Penny pinched: Production stopped as costs outpace value

VICKSBURG, Miss. (VDN) — The U.S. Treasury Department is officially ending production of the penny, immediately beginning the phaseout of America’s lowest-denomination coin in an effort to cut waste and save taxpayers millions.

The department announced last Thursday that it placed its final order for penny blanks this month and directed the U.S. Mint to stop making new one-cent coins once the current inventory is exhausted. No new pennies will be put into circulation going forward.

“Given the cost savings to the taxpayer, this is just another example of our administration cutting waste and making the government more efficient for the American people,” the Treasury said in a statement.

The decision, first reported by The Wall Street Journal, puts an end to years of debate over the coin’s future. The penny has cost more to make than it’s worth for nearly two decades, and now each coin costs more than three cents to produce. The Treasury estimates halting production will save $56 million annually.

President Donald Trump took credit for the move earlier this year, writing on social media in February: “For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! I have instructed my Secretary of the Treasury to stop producing new pennies.”

Without new pennies entering circulation, consumers will still be able to use existing ones for purchases, but businesses conducting cash transactions will begin rounding totals to the nearest nickel. The Treasury is expected to issue national rounding guidelines similar to those adopted in Canada when it eliminated its penny in 2013.

Retailers are already preparing for the change. “Convenience stores sell a lot of products, but what they really sell is speed,” said Jeff Lenard, spokesman for the National Association of Convenience Stores. “Even shaving a second or two off each transaction by eliminating the penny can make a big difference.”

However, some economists warn the cost problem may not be fully solved. Nickels, the next-lowest coin, cost nearly 14 cents to produce, and if their production ramps up to offset the loss of pennies, the savings could quickly disappear. In 2024, the Mint made 3.2 billion pennies, compared with just 202 million nickels — a dramatic cutback intended to curb losses.

“If the U.S. stops making pennies permanently, nickel demand could more than double,” said Mark Weller, executive director of Americans for Common Cents, a coin industry group.

The penny has long struggled to stay relevant. Many fall out of circulation quickly, ending up in jars, drawers or left behind in change trays. “When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful,” said economist Gregory Mankiw of Harvard University.

The Treasury has not indicated any changes to nickel production yet but said it would monitor demand as the transition unfolds.