What's next for the penny? The details on US decision to end penny production
After 233 years of pennies in our pockets, the U.S. this month will officially end penny production, according to statements from the Treasury Department made public on Thursday.
The U.S. Mint is using the last of its coin blanks to mint the final pennies this week. Treasury told multiple sources that it will stop putting pennies into circulation early next year, according to the Wall Street Journal, CNN, MSN, and Business Insider.
Pennies will still be legal tender, but cash prices will soon be rounded up or down to the nearest nickel.
President Donald Trump said in February that he would order the Treasury Department to stop minting pennies as a budget-cutting measure. But a resulting shift to nickels, which are more expensive than pennies to produce, could cause other losses in the federal budget.
The familiar Abraham Lincoln penny cost about 3.7 cents to produce in fiscal year 2024, according to the U.S. Mint's annual report. A nickel cost about 13.8 cents to make.
How much does it cost to make pennies and nickels?
Pennies were among the first coins introduced by the U.S. Mint, a bureau of the Treasury Department, more than 230 years ago.
The cost of making both coins has increased over the past two decades. Some of that is attributed to the rise in raw material prices of copper, nickel and zinc.
Higher metal prices result in higher production costs. If production costs get too high, the seigniorage – the difference between a coin’s face value and the cost of putting it into circulation – make the coin worth less than what it costs to make it.
How many pennies are made every year?
About 3.2 billion pennies were manufactured in fiscal year 2024, a decrease from fiscal year 2023. The cost to produce and distribute a single penny, however, rose 20% from the same period.
About 114 billion pennies are in in circulation, or $1.14 billion, according to the Federal Reserve, which buys coins from the Mint and rations them to banks and other institutions.
Though coins remain in circulation unless damaged, many are accidentally lost or discarded. Inventories dropped significantly in 2020 during the COVID-19 pandemic and the Fed asked the Mint to increase supply, according to the Cato Institute.
Pennies were cut because of costs
Though Trump appointed Scott Bessent to head the Treasury Department, the U.S. Mint receives congressional approval for every coin it manufactures, according to its website.
Trump's Truth Social post followed a similar one by the newly established Department of Government Efficiency, or DOGE, in a post on X on Jan. 21, Paste BN said. Tesla and SpaceX CEO Elon Musk, who heads DOGE, has criticized the government for its spending on pennies.
Some politicians and economists have advocated discontinuing the penny. President Barack Obama said in an interview in 2013 that the penny is a “good metaphor” for problems facing lawmakers, ABC News reported.
Canada, Great Britain, Australia, Israel, Brazil, Norway, Finland and New Zealand are among nations that have either ceased to produce or have removed low-denomination coins, Reuters reported. Canada discontinued its penny in 2012, and financial transactions were rounded up or down to the nearest five cents.
CONTRIBUTING Minnah Arshad, Kinsey Crowley and Fernando Cervantes Jr.
SOURCE Paste BN Network reporting and research; Reuters; U.S. Mint; Department of the Treasury; coinnews.net