No More Pennies for Your Thoughts

On February 9, 2025, the White House instructed the U.S. Department of the Treasury (Treasury) to cease production of the penny. The last regular minting of the penny occurred in November 2025.

Not long after, I began receiving inquiries from local governments regarding how to manage financial transactions when pennies are no longer available. It turns out, the U.S. will be following the same process that Canada uses, since it discontinued production of the Canadian penny in 2012.

This blog will review guidance on how to discontinue use of pennies at local government service counters and review best practices in handling cash transactions without pennies.

National Advice and Guidance

The National Conference of State Legislators (NCLS) addressed this topic last fall, noting that the federal government left policy implementation up to the states, and providing guidance for rounding cash transactions to zero or five cents.

 On December 23, 2025, the Treasury published its Penny Production Cessation FAQs, which mirrors NCLS guidance.  Finally, on March 23, 2026, Governor Ferguson signed into the law HB 2334, which relates to adjusting the amount of cash transactions to eliminate the need for pennies. The effective date for this bill is June 11, 2026.

Rounding Cash Transactions

Rounding only occurs on the final amount due from the buyer. This includes the price of the goods or services, all applicable taxes and fees, as well as any discounts or price adjustments made by the seller.

If the final digit in a cash-based transaction ends in one or two cents, the transaction may be rounded down to zero cents. If the final digit in a cash-based transaction ends in six or seven cents, the transaction may be rounded down to five cents. If the final digit in a cash-based transaction ends in three or four cents, the transaction may be rounded up to five cents. If the final digit in a cash-based transaction ends in eight or nine cents, the transaction may be rounded up to 10 cents.

The table below demonstrates how this works using sample transactions.

It is important to note that only financial transactions paid in cash (legal tender) will be impacted. All other forms of payment should still be calculated to the penny. This includes checks, money orders, credit cards, debit cards, and electronic payments. 

Another important note: If a customer or the local government can either pay to the penny or provide change to the penny, then rounding would not be required.

Cash Handling Policies and Recommendations

Since the process for rounding cash transactions is now state law, technically, a local government would not be required to adopt a policy for rounding cash transactions.

Minimally, though, I recommend local governments review their cash receipting policies and procedures to determine whether any updates need to be made.

Conclusion

As local governments consider how to incorporate round-up equations into daily financial practice, it is important to remember that only cash transactions will be impacted.

If your agency decides to update your financial policies to address rounding for cash transactions, please send them to MRSC so that we can consider them for inclusion in our Sample Document Library, which features examples of local government resolutions, ordinances, policies, contracts, agreements, and more. Policies can be emailed to me or to our Information Specialist / Librarian.