The Death of the Penny

For over two centuries, the one-cent coin, colloquially known as the penny, has been a staple of American culture and consumership. However, in the 21st century, it has become more of a nuisance than a necessity. The U.S. Department of the Treasury’s recent decision to terminate the production of the penny by 2026—announced after the White House ordered it to end mintage of the coin—is a step forward in adapting to the realities of the modern American economy. 

Coins once played a sentimental role in American culture and history, from childhood piggy banks to vending machines. Yet as society moves towards a cashless economy, the cultural attachment to coins is fading. The continued production of the penny is more nostalgic than necessary. Pennies rarely circulate in the economy because most individuals do not use them; they accumulate in drawers and jars.

The conversation concerning the termination of penny production started after former U.S. Representative Jim Kolbe introduced three different bills to the House—the Price Rounding Act of 1989, Legal Tender Modernization Act of 2001, and the Currency Overhaul for an Industrious Nation Act. The bills attempted to stop penny production, prescribe a system of rounding to the nearest five cents, and initiate a limit on the number of pennies used on a single transaction. However, the bills failed to pass. Similarly, Senators John McCain and Mike Enzi introduced the Currency Optimization, Innovation, and National Savings Act of 2017, which also failed to pass. 

Public support for the elimination of the penny has since increased; a relative majority of Americans across partisan lines favor its termination. Most coinage, the largest offender being the penny, have largely fallen out of use in day-to-day transactions. The rise of debit and credit cards, mobile payments, and tap-to-pay technology has made carrying small-denomination coins unnecessary. Moreover, as a result of steady inflation of the cost of goods and services, coins have become nonessential—relative to other forms of payment—due to the sheer amount needed to complete a transaction. In most retail environments, American consumers no longer have the ability to pay for items solely using pennies. Cashiers often round totals to avoid dealing with excess pennies, and many businesses refuse to accept large quantities of small change altogether.

One of the other frustrations concerning the production of the penny is the cost versus value margin. The cost to manufacture and circulate the penny is nearly four cents, standing at $0.0369. Furthermore, the penny’s cost has continued to rise, increasing by a stark 20.2 percent from 2023 to 2024. Eliminating the penny would reduce production inefficiencies and save American taxpayers $56 million annually.

Although retiring the penny is a significant step, the Treasury should not stop there. The nickel poses challenges similar to the penny, involving high production costs and diminishing practical value. The Treasury is currently looking towards an alternative material that would reduce the cost of production for the nickel. However, a more practical solution is ending the manufacturing of the nickel entirely. Replacing the nickel with a separate material could compromise the durability and usability of the coin. Additionally, due to rising inflation, while the purchasing power of the nickel diminishes, the resources used to construct the nickel will ultimately continue to increase in price. This means that, in the long term, this solution wouldn’t be effective. 

The dime is another coin that the Treasury should seek to eliminate. Although the dime remains cost-effective, costing 5.76 cents to produce, phasing the coin out of manufacturing before it becomes an economic drain would prevent future issues if the price of dime production did outweigh its value. Moreover, similar to the aforementioned coins, the dime has largely fallen out of disuse—a trend which is only likely to escalate. The retirement of these coins will provide further conviction to both foreign and domestic viewers that the U.S. economy is evolving to the standards of the modern world.

This issue is not the first of its kind for the U.S.. The country eliminated the half-cent coin in 1857 after determining that the continued production of the half-cent coin was impractical. The half-cent coin was rendered obsolete due to the rise of the penny and the low value of the coin compared to the cost of goods. This is analogous to the penny falling into disuse due to the lower purchasing power it now yields. Seeing as now the one-cent coin faces the same problem, it is essential for the U.S. Treasury to follow precedence.

Besides historical precedent, other present-day nations have also successfully eliminated low-value coins without disrupting commerce. The Canadian one-cent coin, also known as the Canadian penny, was taken out of circulation in 2012. The decision to stop mintage came at a time when the Canadian penny cost 1.5 Canadian cents to manufacture and distribute—a significantly lower proportionate cost than the aforementioned price of the U.S. penny. Subsequently, cash transactions in Canada were rounded up to the nearest multiple of five cents; the total amount of money saved still outvalued the cost on consumers. U.S. Secretary of the Treasury Scott Bessent aims to adopt a similar program of rounding to the nearest nickel.

While the removal of inefficient coins is a prudent financial decision, it should not pave the way for policies that harm the broader U.S. economy. The government must remain fiscally responsible and not use the elimination of the penny for leverage as justification for wasteful economic policies. Apolitical and efficient reforms should be made to create an economy that aids U.S. consumers and guides them through the realities of the contemporary economy. These improvements should come from bipartisan efforts at both a local and national level. Data should guide decisions rather than political opportunism. Partisan resolutions such as the unnecessary cuts in Medicaid eligibility—and increased spending on the military brought on by the One Big Beautiful Bill Act—are fiscally irresponsible and should be scrutinized, not overshadowed or encouraged by the victory of removing the penny. Reckless acts such as the above, not bound by party lines, will bring unnecessary harm to American consumers across all socioeconomic classes. 

While modernization is essential, policymakers must remain cautious about moving too radically in financial reform. Abrupt or overly aggressive changes to the financial system may alienate small businesses and individuals. Policymakers must ensure that changes to the monetary and financial systems do not disproportionately disadvantage certain demographics, offering economic concessions if they do. President Trump should evaluate the risks and benefits of certain decisions and consult apolitical financial experts before pushing forward ideas that may focus more on monetary benefit for a few instead of for all. Regarding a reduction in the use and circulation of pennies and other coins, this may mean subsidizing the cost of cash registers at small businesses and preventing a drastic increase in price for consumers for the sake of rounding. Decisions such as these would ensure an easy transition for Americans without economic instability, which should always be the aim of such policies. Ultimately, the elimination of the penny is a small yet positive step towards the modernization of our economy.