U.S. to Eliminate Pennies in 2026: What to Know

The United States is on the brink of a major change in its currency system. President Donald Trump has directed the Treasury Department to cease production of the penny, a decision that has been long-awaited and highly anticipated. While the pennies currently in circulation will remain legal tender for the time being, the U.S. Mint will gradually wind down production until its current supply of blanks runs out.

The decision to eliminate the penny is not a new one. President Trump has been vocal about his desire to stop producing the costly coins since shortly after taking office. He has cited the inefficiency and waste of minting pennies that cost more than their face value. The Department of Government Efficiency, led by Elon Musk, has also voiced support for discontinuing penny production due to the negative seigniorage – the cost of producing each penny exceeds its value.

The U.S. Mint produces billions of pennies annually, despite each penny costing 3.7 cents to produce. This surplus is partly due to the fact that Americans do not use pennies as frequently as other coins. In fact, millions of dollars in coins are discarded each year, with billions more sitting idle in jars and cupholders across the country. The cost of minting pennies has reached over $85 million in recent years, making it a costly endeavor.

One potential downside of eliminating the penny is the increased reliance on nickels, which are even more expensive to produce at nearly 14 cents each. However, the move to phase out pennies is not unprecedented. In 2020, the U.K.’s Royal Mint announced a halt in production of certain coins due to an overabundance in circulation. The coins remain legal tender, despite production ceasing.

The decision to eliminate the penny is a significant one and has been met with both support and skepticism. Critics argue that rounding transactions to the nearest nickel could lead to increased costs for consumers, while proponents see it as a necessary step towards modernizing the currency system. Only time will tell how this change will impact the daily lives of Americans, but one thing is for certain – the penny’s days are numbered. In 2020, the head of Canada’s national mint predicted that the 5- and 10-cent coins would eventually meet a “graceful death” as fewer people use them. This prediction follows the successful elimination of the penny in Canada in 2012. When the penny was phased out, the coins were allowed to remain in circulation and legal tender, but merchants were encouraged to round monetary amounts to the nearest 5-cent increment. A consumer education program was also implemented to help shoppers adjust to the new system. Today, rounding up or down to the nearest 5-cent increment has become a common practice in Canada.

New Zealand also took steps to eliminate small-denomination coins, getting rid of 1- and 2-cent coins in 1990 and the 5-cent coin in 2006. Surprisingly, researchers found that prices actually decreased after the coins were eliminated, suggesting that market competition prevented retailers from raising prices. Sweden was an early adopter of this trend, stopping production of its lowest-denomination coins in 1972 and gradually phasing out other small coins over the years.

The debate over eliminating small-denomination coins often centers around the use of cash and its impact on low-income individuals without bank accounts. Cash transactions have been declining for years, especially during the pandemic as more people switch to contactless forms of payment. While some argue that consumers would lose out if prices were rounded up without pennies, studies have shown that the odds of rounding up or down are balanced.

Countries that have eliminated small-denomination coins have implemented various strategies, from ceasing production of the coins but allowing existing ones to remain in circulation to setting a deadline for turning in the coins. Cash transactions are typically rounded to the nearest 5-cent increment in these countries, while cashless transactions are still calculated to the cent.

In conclusion, the phasing out of small-denomination coins is a trend that has gained momentum in several countries. As the use of cash continues to decline and more people embrace digital forms of payment, the future of coins like the penny remains uncertain. The decision on how to treat these coins going forward will likely involve considerations of consumer convenience, economic impact, and the overall trend towards a cashless society.