February 2026 | By Jenna Nyberg
The U.S. government ended penny production in May 2025, and shortages are already impacting businesses and taxpayers nationwide. Our 5 cents on the situation:
1. Changes at checkout
Sales tax on transactions must always be calculated on the exact sales price before rounding. The calculated tax must be remitted even if the total is rounded.
Many retailers that are unable to make exact change due to a lack of pennies are opting to round cash transactions to the nearest nickel for the time being.
2. Handling cash payments
The Texas Comptroller of Public Accounts will continue to accept pennies while they are legal tender for those Texas taxpayers who are remitting tax payments in cash.
Cash payments to the Comptroller’s office for certain taxes and fees may be rounded down to the nearest nickel.
3. Pinching pennies
Retailers have reported a swift shortage in penny supply despite prior estimates that it would take months for the 114 billion pennies in circulation to run out.
Many retailers transitioned to cashless payments long before the last penny was pressed. Pennies are, however, still legitimate currency and may be used for transactions — but according to the Federal Reserve, businesses have a legal right to refuse cash or coins.
4. Phasing out low-value coins internationally
Production of penny equivalents has already ceased elsewhere, including in the Bahamas (2020), Canada (2012), Australia (1992) and New Zealand (1987).
While other countries have made phase-outs happen, many states are waiting for detailed guidance from the U.S. government. Texas is among the few states setting the standard with early action, along with New York and Utah.
5. The cost of change
According to the U.S. Mint, nickels and pennies are the only two coins with production costs that exceed their face value — 13.8 cents and 3.7 cents, respectively.Stopping penny production is expected to save the Mint approximately $56 million annually. Considering nickel production costs and a potential rise in demand in the absence of the penny, only time will tell the fate of the 5-cent piece.
