For years, the cost to mint a penny has exceeded its face value. In February 2025, President Trump instructed the U.S. Mint to cease penny production, calling the practice “wasteful” considering its cost. In May, the U.S. Mint confirmed that it placed its last order of pennies, which were minted in June. Although pennies remained in circulation, the Federal Reserve then began ceasing mechanisms to distribute pennies to banks, resulting in widespread shortages across the country. By November, 109 of the Federal Reserve’s 165 currency distribution locations no longer distributed pennies. The penny’s swift cancellation and sudden shortage came without substantive guidance to businesses and banks on how to handle transactions moving forward. Although limited guidance has since been issued, stakeholders remain left with uncertainty and ambiguity about how to comply with the laws amidst the shortage. The penny shortage poses several legal challenges for businesses and banks, who should stay abreast of these issues as the shortage persists.
Tax Implications
With the cessation of penny production, businesses must prepare changes in sales and use tax calculations. Each state’s unique sales tax laws and compliance requirements will shape the impact. Retailers could face challenges ensuring their rounding methods are compliant, as each state’s unique sales tax laws and compliance requirements may require businesses to use different calculations for different states.
Key legal implications include the risk of over- or under-collecting sales tax, the need for new state guidance on proper rounding procedures, and updates to point-of-sale systems to reflect state-specific requirements. As this shift approaches, businesses should closely monitor state regulations and proactively adjust their compliance practices to avoid penalties and ensure seamless transactions.
Consumer Protection Laws
Businesses are currently without clear instruction as to whether they should round either transactions or change due to a customer up or down if they cannot make perfect change. Rounding up transaction totals or rounding down change due to a customer presents significant state attorney general enforcement and consumer litigation risks—particularly class action litigation. Plaintiffs could pursue causes of action under state unfair and deceptive trade practices acts by arguing that businesses failed to advertise the actual price of goods and that rounding change down is a “hidden fee.” See, e.g., Va. Code Ann. §59.1-200(16)(a). In addition to general consumer protection laws, rounding change down on transactions for regulated goods, such as alcohol, may run afoul of product-specific laws.
Unit Pricing Laws
Similarly, many states require posting of certain prices, including unit pricing, in their weights and measures law. Rounding a transaction total up or down at the point of sale would likely implicate those laws’ requirements that the correct pricing be posted on the shelf-tag.
SNAP Recipients
Various federal laws prohibit retailers from treating SNAP customers “differently” than cash and credit customers. See, e.g., 7 CFR 278.2(b) and 7 CFR 274.7(f)). Should a retailer opt to round transactions up or down for cash customers, they may effectively be considered to be charging SNAP customers differently.
Cash Refund, Cash Discrimination, and Surcharging Policies
The penny shortage also has implications for cash refunds, cash discrimination, and surcharging policies. To the extent that rounding occurs on cash returns of goods, customers may not receive the value that they paid at the time of sale. While retailers can institute no cash refund policies for non-defective goods, such policies must be clearly disclosed at the time of sale and, in some states, may not be retroactively applied to avoid rounding cash returns. See, e.g., Conn. Gen. Stat. Ann. § 42a-110aa; Va. Code Ann. §59.1-200(16)(a). Further, several states and large cities (like New York, Washington, D.C., and Philadelphia) have instituted cash discrimination laws which prohibit retailers from refusing cash. Simply refusing cash during the shortage may violate such laws. Finally, various states have anti-surcharging laws which prohibit retailers from charging credit customers more than customers paying by other methods. While those states and the federal Truth in Lending Act allow discounts for non-credit customers, those discounts must be clearly disclosed at the time of sale. Retailers should avoid rounding down cash transactions but not credit transactions, unless they clearly disclose such policy at the point of sale.
Proposed Legislation
A proposed bipartisan bill, the Common Cents Act, would preempt contrary state laws and allow for rounding in all circumstances. The bill remains pending, but stakeholders should continue to monitor the status of the bill. In the meantime, businesses should carefully consider the legal implications of the penny shortage and update any policies or guidance accordingly.
