U.S. Treasury to Retire the Penny in 2026: End of an Era for the One-Cent Coin

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The U.S. Treasury Department has officially announced plans to cease production of the penny starting in early 2026, marking the end of over two centuries of minting the one-cent coin. This decision follows a directive from President Donald Trump in February 2025, aimed at reducing government spending by eliminating the costly production of pennies. 

Why Is the Penny Being Phased Out?

Producing a single penny costs approximately 3.69 cents, nearly four times its face value. In 2024 alone, the U.S. Mint spent over $85 million to produce 3 billion pennies, resulting in a significant financial loss. By halting penny production, the Treasury anticipates saving about $56 million annually. 

The penny's diminished purchasing power and limited use in daily transactions have also contributed to the decision. With the rise of digital payments and a general decline in cash usage, many pennies end up unused or discarded, leading to a continuous demand for new coins. 

What Happens Next?

  • Final Production: The U.S. Mint has placed its last order for penny blanks, with production expected to cease once the current supply is exhausted in early 2026.

  • Circulation: Existing pennies will remain legal tender indefinitely. However, as they gradually disappear from circulation, cash transactions may be rounded to the nearest five cents, similar to practices adopted in countries like Canada.

  • Legislative Action: While the President has directed the cessation of penny production, formal elimination of the coin may require congressional approval. Bipartisan efforts, such as the introduction of the "Common Cents Act," are underway to address this.

Cultural and Economic Considerations

The penny has been a staple of American currency since 1793 and has featured President Abraham Lincoln's image since 1909. Its phase-out raises questions about the impact on pricing strategies, such as the common practice of pricing items ending in .99, and the sentimental value attached to the coin. 

Additionally, the move has sparked discussions about the future of other coins, like the nickel, which also costs more to produce than its face value. The Treasury is exploring options to reduce production costs, including potential changes in coin composition

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