President Donald Trump’s administration ended the production of penny coins last year in what it said was a cost-saving measure. However, Michigan businesses continue to face challenges navigating cash transactions without clear federal guidance about the transition to a pennyless economy.
Andrew Beardslee, vice president of government affairs with the Michigan Retailers Association, told the Michigan Independent that it wasn’t a surprise to see the Department of Treasury, which oversees the United States Mint, stop minting pennies as their value has declined over time (the cost of manufacturing a single penny has more than doubled in the last decade). Yet, there were only six months between the Department of Treasury’s announcement that it would phase out the production of pennies and the Mint’s production of its last penny on Nov. 12, 2025.
“It wasn’t anything that retailers were necessarily opposed to. And I think that as long as there is clarity about how to handle the consequences of that, retailers should have no problem,” Beardslee said. “I think the issue is that there hasn’t been much clarity yet.”
While new pennies won’t be made, there are still roughly 114 billion pennies in circulation. The Federal Reserve plans to recirculate those pennies for as long as possible, according to an FAQ page posted on the Department of Treasury website. “How long existing pennies remain in circulation depends largely on consumer behavior,” the post reads.
The FAQ page, posted online on Dec. 23, 2025 following public outcry from American retailers regarding the lack of federal guidance, includes information for businesses on how to manage cash transactions now that the coin isn’t being produced. The Treasury provided answers about how to respond as the supply of pennies drops out of circulation and whether businesses are still required to accept pennies after they’re no longer distributed. It advises retailers to round prices either up or down to the nearest five cents, depending on their state’s sales tax laws, and to continue to accept pennies as legal tender.
Before the Treasury issued its guidance, Beardslee said, some Michigan retailers had had to decide on their own how to go about cash transactions: Some rounded up or down to the nearest five cents based on best practices learned from Canada, which stopped producing pennies in 2012, while others resorted to always rounding down to benefit the customer and prevent any issues that rounding up could cause. Grocery chain Kroger put up signs across its stores asking customers to use exact change, while Cava, a fast-casual Mediterranean restaurant chain, put up signs asking customers to consider cashless payments like credit or debit cards. Beardslee said he also saw retailers incentivize customers to use exact change with a free coffee in return.
Bearslee also expressed concern that, because the Treasury’s FAQ guide came with a notice that the guidance is nonbinding, it’s not legally enforceable.
“Adherence to these FAQs doesn’t necessarily protect you from those potential legal consequences. It’s just sort of recommendations,” Beardslee said.
In some situations, business owners risk violating government regulations, depending on the rounding policy they adopt. For example, the Detroit City Council passed an ordinance in 2023 prohibiting businesses from going cashless or from charging more for cash transactions. The U.S. Department of Agriculture reminded SNAP-authorized retailers that they must follow the program’s equal treatment provisions, meaning a transaction using an EBT card can’t be treated differently than other types of payment. If a retailer rounds down a transaction for cash payment, that customer could pay less than someone making a similar purchase with an EBT card, which would violate this requirement.
The Michigan Department of Treasury released its own guidance for business owners concerned about complying with the state’s sales and use tax laws. According to a Dec. 8 memo, rounding cash totals to the nearest five cents can only occur after the taxes have been calculated.
Beardslee said there needs to be a federal standard to create clarity and consistency for business owners and their customers. He supports the passage of the Common Cents Act, which would formally direct the treasury secretary to stop minting the penny and codify the government’s rounding guidance in federal law. Rep. Lisa McClain, a Michigan Republican, introduced the bill last April in the U.S. House of Representatives, where it awaits a floor vote.
Beardslee said he wonders if it isn’t time to get rid of the nickel coin as well. The cost of producing a nickel is nearly triple its value, according to a 2024 U.S. Mint report.
“Now I’m wondering if we need to be ready for this to happen for some other small coins as well,” Beardslee said.
By Alyssa Burr for the Michigan Independent.
Broadcast version by Chrystal Blair for Michigan News Connection reporting for the Michigan Independent-Public News Service Collaboration
