The Transition Away from Pennies: Legislative and Practical Implications

In February 2025, President Donald Trump directed the U.S. Treasury to cease minting new pennies, leading to a gradual reduction in penny production that culminated in a complete halt by November 2025. Although the Common Cents Act, which aims to formally eliminate the penny, has not yet been signed into law, it has garnered bipartisan support and made significant progress through Congress. This decision has raised questions about how to manage the existing pennies still in circulation, affecting both banks and consumers.

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As the circulation of pennies diminishes, banks have begun adjusting their policies. For instance, Susan Roy, Vice President of Grand Marais State Bank, noted that the Federal Reserve initially planned to charge banks for penny pick-ups, prompting GMSB to limit penny acceptance from customers. However, this policy was later reversed, allowing banks to send pennies without incurring extra fees. Despite this, GMSB has not been able to order additional pennies, leading to a continued acceptance of pennies from customers until they are no longer available.

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In Washington, state lawmakers are addressing the implications of the federal government's decision to stop penny production. Proposed legislation, specifically House Bill 2334 and Senate Bill 6230, seeks to establish a uniform approach for retailers regarding cash transactions. Under these bills, cash purchases would be rounded to the nearest five cents, with specific rules on how to handle rounding based on the final digit of the total price. For example, totals ending in 1 or 2 cents would be rounded down, while those ending in 3 or 4 cents would be rounded up.

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Retailers have expressed concerns about the potential confusion and financial implications of these changes. Molly Pfaffenroth, government affairs director for the Washington Food Industry Association, emphasized the need for clear guidance to avoid impacting tax obligations and to protect against consumer lawsuits. The proposed bills aim to provide these "guardrails," ensuring that businesses can adapt without incurring additional costs or legal risks.

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The U.S. Department of the Treasury has indicated that halting penny production is expected to save approximately $56 million annually, as the cost to manufacture a single penny has risen to about 3.69 cents. Meanwhile, banks and retailers are preparing for the transition, with GMSB updating its software to accommodate rounding practices in anticipation of the Common Cents Act's potential enactment.

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As the legislative process unfolds, the Washington state government will need to finalize the proposed bills and provide guidance to retailers and consumers. The ongoing discussions highlight the complexities of transitioning away from the penny, with implications for pricing, banking, and consumer behavior as the nation adapts to a penny-less economy.

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• “This was not something that I wanted to do or write or have to deal with during this short session, but it does matter,” — Rep. April Berg, D-Mill Creek

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• “Over the holidays, one of the busiest times of year for grocery stores, my members have experienced challenges providing exact change,” — Molly Pfaffenroth, Government Affairs Director, Washington Food Industry Association

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• “People can still come in. We’re not turning pennies away,” — Susan Roy, Vice President, Grand Marais State Bank

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