US Ends Penny Minting After Over 230 Years to Stop $56 Million in Annual 'Waste'

The United States is preparing to turn a page on a history spanning more than 230 years with the announcement that it will cease minting the penny (one-cent coin). The Philadelphia Mint is scheduled to issue the final batch of the one-cent coin on Wednesday, concluding production of a currency that began in 1793.

The decision, first announced by President Donald Trump in February as part of an anti-waste effort, is primarily aimed at achieving massive financial savings. Trump articulated his intention at the time, stating: "We want to root out waste from the budget of our great nation, even if it is one penny at a time."

Cost Calculations and Savings

The economic rationale behind ending the penny's mintage is clear and straightforward: the cost of production significantly exceeds the coin's face value. According to the Treasury Department, the penny – which features the image of Civil War President Abraham Lincoln and is made of copper-plated zinc – currently costs about four cents per piece to produce, more than double the cost a decade ago.

The Treasury Department estimates that ceasing the minting of the penny will save the government approximately $56 million annually.

Officials point out that the rise of electronic transactions has made the penny increasingly obsolete. Although about 300 billion pennies will remain in circulation, this number is "far more than is needed for commercial transactions." Government analyses from 2022 indicate that about 60% of all coins in circulation (equating to $60 to $90 per household) remain stored in homes inside piggy banks or containers, deemed not "worth" spending or exchanging.

Impact on Shoppers and the Rounding Warning

Despite government savings, the phasing out of the penny has already prompted companies to adjust prices by rounding them to the nearest five cents. Analysts anticipate that this trend may lead to higher purchase costs for shoppers.

A study by researchers at the Federal Reserve Bank of Richmond warned that this rounding could cost consumers up to $6 million annually.

International Experiences and the Shift to the "Nickel"

The US is thus following the footsteps of other countries that have abandoned their low-denomination coins, most notably:

• Canada: Produced its last batch of one-cent coins in 2012.

• Australia and New Zealand: One and two-cent coins were withdrawn in the 1990s, and New Zealand ceased production of the five-cent coin in 2006.

• United Kingdom: Withdrew a plan to eliminate the one-penny coin in 2018 but ceased coin production altogether in 2024 after officials concluded there were enough one and two-pence coins in circulation due to the increase in electronic transactions.

As the penny exits the stage, attention now turns to the next coin facing a similar fate: the nickel (five-cent coin). This coin currently costs about 14 cents to produce, nearly three times its face value! The withdrawal of the nickel is expected to have a much larger economic impact, potentially costing consumers around $55 million annually, according to the same Federal Reserve study.