The Treasury Department will begin phasing out the penny early next year, ending a run for a mainstay piece of American currency first produced by the federal government in the 1790s.
This month, Treasury has made its final order of penny blanks — the material used to make pennies — and its coin producer at the US Mint will continue to manufacture pennies while an inventory of penny blanks exists.
But production will cease after that inventory runs out, a decision first reported by the Wall Street Journal.
The reasons for phasing out the penny are that demand for the lowest-denomination unit of American currency has drastically decreased, and the costs of producing the one-cent piece have eclipsed its worth.
Over the past 10 years, the production cost of a penny has risen from roughly $0.01 to nearly $0.04. Treasury expects savings to accrue as production phases out and it stops using certain facilities.
The US Mint estimates that stopping production of the penny will result in an immediate annual savings of $56 million in material costs.
The move comes after President Trump has pushed to end the production of pennies, issuing a directive in February to Treasury Secretary Scott Bessent and arguing that the cost to produce the penny is more expensive than the coin itself.
While Congress sets the rules for currency production and can discontinue or eliminate coins, the Treasury has the power to stop the actual production of new coins.
There has also been a bipartisan push in Congress to end production of the penny. Sen. Mike Lee (R-Utah), along with Sen. Jeff Merkley (D-Ore.), introduced the Make Sense Not Cents Act on May 1 to save taxpayers millions annually by ending production of the US penny.
In April, House Reps. Lisa McClain (R-Mich.) and Robert Garcia (D-Calif.), alongside Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.), introduced the Common Cents Act — bipartisan legislation to end the production of pennies.
Overall, Americans are using cash far less often. Cash remained the third-most-used payment instrument, accounting for 16% of payments in 2023, down two percentage points from 2022, according to the Federal Reserve.
Once production is phased out, there won’t be enough pennies circulated for everyday cash transactions. Businesses will need to start rounding up or down to the nearest 5 cents, though non-cash transactions will continue to be priced at exact change.
The penny was one of the first coins made by the US Mint after its establishment in 1792. The design on the first penny was of a woman with flowing hair, symbolizing liberty. The coin was larger and made of pure copper, whereas today’s smaller coin is made of copper and zinc.
