What The Common Cents Act Means For Retail

The Policy Landscape For The Penny Phaseout Is Far From Mint Condition

Calls for the end of the penny date back to the 1980s, following increases in the price of copper. Since 2006, the cost to produce the penny has outpaced its value, resulting in nearly two decades of reported losses by the Mint.

Action began in February 2025, following calls from President Trump directing the Treasury Department to cease production of the penny as part of his “commonsense agenda.” Trump-appointed Treasury Secretary Scott Bessent subsequently complied with this request.

The full legality of this action, however, is questionable, as Congress holds the exclusive power to coin money and regulate every phase of currency per Article I, Section 8, Clause 5 of the U.S. Constitution. However, existing federal law also directs the Treasury secretary to mint authorized coins in amounts the secretary determines are necessary to meet the country’s needs. The Treasury Department has cited that statutory discretion as its authority to suspend penny production. Despite this, Congress has not opposed these actions and is instead reviewing the bill.

If enacted, the Common Cents Act would formally amend the U.S. Code to prohibit the Treasury from producing one-cent coins for general circulation. With production of pennies already halted, the bill’s most immediate significance is its guidance on rounding. When exact change cannot be provided, cash totals that end in one, two, six or seven cents may be rounded down to the nearest amount divisible by five. Totals ending in three, four, eight or nine may be rounded up. The bill also provides an alternative where retailers “may” simply round in favor of the customer to amounts divisible by five, either down when a customer owes or up for the amount of cash change or a refund owed to the customer.

The word “may” within the bill is important. The bill would provide retailers with the authority to round, rather than mandating that they do so. Its provisions only pertain to the final totals of cash transactions in the event that exact change cannot be provided. Checks, gift cards, credit cards, electronic transfers and other noncash payments would continue to settle to the cent. The distinction between cash and non-cash payments is also significant for retailers as the penny phaseout poses several compliance challenges.

The Compliance Questions Are Adding Up With SNAP And State Rounding Rules

Existing pennies remain legal tender and will continue circulating, creating multiple pricing scenarios at checkout. A transaction could settle at its exact value when pennies are available, at a rounded value when they are not, or at its exact value when paid electronically. Those differences raise compliance questions involving Supplemental Nutrition Assistance Program (SNAP) customers and state or local laws governing cash acceptance and payment parity.

The bill does not specifically address the handling of SNAP payments. Federal law requires eligible foods to be offered to SNAP customers at the same prices and on the same terms as those for cash payments, except that SNAP purchases are exempt from sales tax. Because SNAP is paid electronically, those transactions would remain exact under the bill. In a jurisdiction where groceries are tax-exempt, a SNAP customer with an eligible-food total of $10.02 would pay the full $10.02, while a cash customer purchasing the same basket may have the total rounded down to $10.00. Although the merchandise price technically remains unchanged, the retailer absorbs the rounding adjustment, making it economically equivalent to a discount for the cash customer.

In jurisdictions that tax groceries purchased without SNAP, the issue becomes even more complicated because the tax remains fixed while the retailer absorbs any downward rounding adjustment. The bill does not expressly address SNAP-specific questions involving equal treatment, accounting practices, or mixed-tender transactions. This is only one layer of complexity currently facing retailers at the state level.

In the absence of an enacted federal framework, 20 states have passed some form of penny-related legislation, with many others under review or having provided official guidance. The scope and wording vary considerably from state to state. Laws in Minnesota, Oklahoma and New Mexico primarily address government payments, while Utah’s legislation is limited to cash liquor sales. These laws do not establish comprehensive statewide rules for typical transactions.

Additional conflicts may arise in jurisdictions that prohibit cash customers from paying more than customers using other payment methods, a rule symmetric rounding can violate when a cash total rounds up. This patchwork of regulations creates a fragmented landscape, particularly for businesses operating across multiple jurisdictions.

Can Retailers Bank On The Common Cents Act’s Section 4 Safe Harbor?

Both the House- and Senate-passed versions of the Common Cents Act attempt to reduce these uncertainties through a Section 4 safe harbor. Under Section 4, businesses adhering to the bill’s authorized rounding provisions “shall not be in violation” of federal, state, tribal or local requirements based on that adherence. This element of the bill is a critical need for retailers operating across multiple jurisdictions.

Context matters. Although the Common Cents Act would offer retailers important legal protections, it will not create a uniform operational framework on its own or eliminate the broader patchwork and challenges that come with it.

Until the legislation is enacted and clearer national guidance is implemented, retailers and states could spend a pretty penny calculating the change ahead.