US Senate Passes Bill to End Penny Production

The U.S. Senate has taken a significant step towards phasing out the penny by unanimously passing the Common Cents Act this past Friday. This bill, previously approved by the House, formally ends the minting of new one-cent coins for circulation. While existing pennies will continue to be legal tender, the Federal Reserve must manage supply disruptions.

As part of the legislation, businesses may soon gain the option to round cash transactions to the nearest nickel. This aims to streamline payments, particularly since the cessation of penny production has created change shortages. Existing state and local laws prohibiting such rounding may be overridden.

The nickel's future is also being considered due to its high production costs, which have exceeded its face value for two decades. In fiscal year 2025, producing a nickel cost 13.31 cents. The Common Cents Act empowers the Treasury to test alternative, cheaper compositions, likely a zinc-nickel mix, to reduce expenses while ensuring compatibility with coin-counting machines.