State lawmakers rush to set rounding rules for when there are no pennies

A few months after the last United States 1-cent coin was pressed, some states are beginning to offer their own 2-cent coins to solve the penny problem by setting rounding guidelines for spot purchases.

President Donald Trump announced early last year that he would end production of pennies, saying it was wasteful. It would cost 3.7 cents to make each 1-cent coin in 2024, according to the U.S. Mint. The move led to a shortage of coins at cash registers last summer, forcing consumers and businesses to face a penniless future in which it would be difficult to make exact change.

The Treasury Department said it would continue to circulate the approximately 114 billion existing pennies “for as long as possible.” Cents must always be accepted as a means of payment.

One solution to the penny problem is to round to the nearest nickel, using a practice called symmetric rounding. If the final price, after taxes, ends in one, two, six or seven cents, the cash payment is rounded down. For example, $1.91 or $1.92 becomes $1.90. If the prize ends in three, four, eight or nine, the cash payment is rounded up. For $1.98 or $1.99, the consumer pays $2.

A bill introduced last year in Congress and passed by the House Financial Services Committee would implement symmetrical rounding nationwide. U.S. Rep. Lisa McClain, Republican of Michigan, said in an email that the federal law is important to avoid a “confusing patchwork of state policies.”

The bill has not passed the House and will still need to pass the U.S. Senate before reaching Trump’s desk.

Meanwhile, bills aimed at combating penniless cash transactions have passed both chambers and are awaiting signatures from the governors of Arizona, Florida, Oregon, Tennessee, Virginia and Washington. Some states are proposing to allow businesses to round up their cash purchases, while others are considering requiring it.

In Indiana, a bill signed this month by Republican Gov. Mike Braun tells businesses they must round up cash purchases for all transactions that don’t end in zero or five. Lawmakers revised that provision in a second bill that makes rounding optional, which would take effect Sunday if Braun signs it into law.

In both bills, Indiana businesses can choose to always round cash purchases to the nearest nickel, always round down, or round up or down depending on the amount.

In Republican-led Tennessee, legislation exempts rounding from prosecution under a state consumer protection law, but does not require rounding.

“This is about providing a safe haven for private businesses,” Republican Rep. Charlie Baum, the bill’s sponsor in Tennessee, said during the floor debate.

Rounding bills have been introduced in about two dozen states since late last year, according to an Associated Press analysis using the bill tracking service Plural.

Outside of legislative bodies, some state agencies have issued guidelines stating that rounding should occur on an after-tax basis and that businesses should ensure that the entire taxed amount still goes to the state.

Cash is no longer used as ubiquitously since the rise of electronic payment methods. Yet about 8 in 10 U.S. adults reported recently using cash in a 2024 survey by the Federal Reserve. Cash was more often used by older people and members of low-income households.

The Treasury wrote online that prices would be “rounded down as often as up, so there should be no overall effect on consumer prices.”

But researchers at the Federal Reserve Bank of Richmond used a 2023 survey to show that prices that didn’t end in zero or five were especially likely to end in eight or nine. Payment amounts may be different when multiple items are purchased or depending on the tax rate, but overall, with prices being rounded up more often, this would result in millions of dollars gained by businesses and lost by consumers collectively, amounting to a few pennies lost per person.

As companies introduced rounding, some Americans took to social media to say they felt ripped off, even if it was a penny or two at a time.

Nikki Capozzo-Hennessy, 50, said she tends to pay with cash because it makes her more conscious of her spending. The Trumbull, Conn., resident posted her grocery receipt online when she noticed the rounding adjustment on an $8.73 purchase, including tax. The store chose to round down and she earned three cents.

Capozzo-Hennessy said it might seem like a hassle if she had to hand over extra pennies every time, but she also thinks it’s practical to stick to just one rule. She runs a food truck business and said they would probably use symmetrical rounds to be consistent.

“At the end of the day, it’s three hundred, but I imagine with all the purchases you make, it can add up,” Capozzo-Hennessy said.

Washington state Rep. April Berg, who introduced a rounding bill, said she understands people who feel frustrated about losing a penny, but that eliminating hard currency leaves few options.

“We made sure everyone was allowed to pay exactly what they owe,” Berg said of his legislation.

The Treasury says stopping coin production will save $56 million a year, but rounding could increase demand for nickels. Pennies are also expensive to make, reaching nearly 14 cents each in 2024, according to the Mint.

Proposed federal legislation currently includes a potential cost-cutting solution, allowing Treasury to adjust the composition of the coin to use less expensive zinc and nickel instead of copper and nickel.