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The U.S. last week unveiled its plan to finally phase out the lowly penny. The Treasury Department has placed its last order for the coins, which will no longer be minted, though they will continue to be legal tender[17].
Among the reasons the U.S. is saying goodbye to the one-cent coin is that the cost of producing a penny has risen dramatically in recent years. In 2024, it cost the U.S. Mint about 3.69 cents to make a single penny -- more than three times its face value[1]. This high cost is driven by several factors:
In 2024 alone, the Mint reported an $85.3 million loss from making pennies[2]. The Treasury expects to save $56 million annually in material costs by discontinuing penny production[5].
Estimates vary, but the most widely cited figure from the U.S. Treasury and other sources is about 114 billion pennies currently circulating in the United States[6]. Some sources suggest the number could be as high as 240 billion, but the Treasury's official figure is 114 billion[7].
How long will the penny survive without new production?
The average lifespan of a penny in circulation is about 25 years[8]. This means that, even after production stops, pennies will remain in use for decades as they slowly wear out or are removed from circulation. Over time, as the supply dwindles and pennies are lost or destroyed, businesses will increasingly round cash transactions to the nearest nickel[9].
Experts do not expect modern pennies to become significantly valuable for collectors in the foreseeable future. Most pennies, especially those from recent years, are so common that their value will remain at or near face value for decades. As one coin dealer put it, "Maybe in 200 or 300 years, but not during my lifetime"[10]. Only rare or unique pennies -- such as those with minting errors or from special years -- are likely to see notable increases in value.
Yes, other coins -- especially the nickel -- are also produced at a loss. In 2024, it cost nearly 14 cents to make a five-cent coin, which is almost triple its face value[11]. Legislative discussions have included proposals to address the cost of nickels, but no official discontinuation has been announced yet. Dimes, quarters and higher denominations are still produced at a profit and are not currently at risk.
The use of cash, and thus coins, is declining as more people pay with smartphones, debit cards and other digital methods[12]. However, coins remain important for:
Eliminating low-denomination coins like the penny will affect those who rely on cash the most, potentially leading to minor rounding adjustments in cash transactions[12].
The U.S. Mint was established in 1792, and the penny was one of its first coins[13]. The penny has featured Abraham Lincoln's portrait since 1909, making it the longest-running U.S. coin design[2]. Over the years, coin compositions have changed due to metal shortages and cost concerns (e.g., switching from copper to zinc in pennies in 1982)[4].
The U.S. has discontinued several coins in its history, including:
These discontinuations were usually due to lack of use, high production costs or changes in economic needs.
Rounding cash transactions to the nearest nickel:
The primary alternative is to simply round cash transactions to the nearest five cents.
This means that when paying with cash, totals ending in 1 or 2 cents would round down, and those ending in 3 or 4 cents would round up. This system is already used in countries like Canada, which eliminated its penny in 2013[14].
Retailers and industry groups, such as the National Association of Convenience Stores, support this approach, as it speeds up transactions and simplifies cash handling[15].
Increased use of nickels:
Without the penny, more nickels will be needed for change. However, this presents a challenge since nickels are even more expensive to produce than pennies (costing nearly 14 cents each in 2024)[16].
Digital and electronic payments:
As cash usage declines, many consumers and businesses are shifting to digital payments, which eliminates the need for low-denomination coins altogether[20]. This transition is expected to further reduce the impact of eliminating the penny, as fewer transactions require physical change[20].
Impact of coin production costs on the national budget
The cost of producing coins, especially pennies and nickels, is a small fraction of the overall U.S. federal budget but a notable part of the U.S. Mint's operating expenses.
Penny production costs about $192 million per year, which is approximately 4% of the Mint's operating budget but only 0.00003% of the total U.S. federal budget[23]. The Mint's total manufacturing budget for all coins (including circulating, bullion and numismatic coins) was estimated at $4.7 billion for FY 2024[24]. The annual savings from ending penny production is expected to be about $56 million[5].
The U.S. federal budget is measured in trillions of dollars annually, so even the combined cost of producing all coins is minuscule in this context. For example, the $192 million spent on pennies is a rounding error in the federal budget, which exceeds $6 trillion per year[23].
While the cost is negligible at the federal level, it is more significant for the Mint itself, where pennies and nickels represent a disproportionate share of production losses[25]. The Mint has had to adjust production strategies and budgets to minimize these losses, such as reducing nickel output when costs rise[26].
The inefficiency of producing coins at a loss has prompted policymakers to consider eliminating low-denomination coins to improve government efficiency and reduce wasteful spending[27]. However, the financial impact on the national budget remains extremely limited and discontinuing the penny is more about operational efficiency than fiscal necessity.
The penny is being phased out because it costs more to make than it's worth, with billions still in circulation that will last for decades.
The U.S. has a long history of adapting its coinage to meet changing economic realities, and the end of the penny continues that tradition.
The move to discontinue the penny is expected to save tens of millions annually for the Mint, but this is insignificant in the context of total federal spending.
[1] https://www.coinnews.net/2025/02/10/penny-costs-3-69-cents-to-make-in-2024/
[2] https://www.cnn.com/2025/05/22/business/us-discontinue-penny
[3] https://abcnews.go.com/US/treasury-department-phase-penny-after-trump-coin-longer/story?id=122070266
[4] https://www.pbs.org/newshour/nation/u-s-mint-moves-ahead-with-plans-to-kill-the-penny
[5] https://www.reuters.com/world/us/us-treasury-unveils-plan-end-production-penny-coin-2025-05-22/
[6] https://learn.apmex.com/learning-guide/coin-collecting/how-many-pennies-are-in-circulation/
[7] https://thehill.com/homenews/nexstar_media_wire/5313817-us-is-ending-penny-production-how-will-you-be-impacted/
[8] https://learn.apmex.com/answers/what-is-the-lifespan-of-a-coin/
[9] https://www.ktvu.com/news/penny-future-if-us-treasure-stops-manufacturing
[10] https://www.cbsnews.com/news/trump-penny-interest-coin-collections/
[11] https://www.coinagemag.com/what-happens-if-the-penny-goes-away/
[12] https://blog.clover.com/how-soon-until-wallets-and-cash-are-a-thing-of-the-past/
[13] https://www.usmint.gov/learn/history/us-circulating-coins
[14] https://www.britannica.com/procon/US-penny-debate
[15] https://www.forbes.com/sites/dougmelville/2025/02/11/is-eliminating-the-penny-equitable-its-cost-taxpayers-250000000-over-the-past-two-years/
[16] https://www.deseret.com/u-s-world/2025/05/22/us-mint-orders-last-batch-of-pennies/
[17] https://www.npr.org/2025/05/22/nx-s1-5407493/no-more-pennies-one-cent-treasury-stop-minting
[20] https://www.moneytalksnews.com/slideshows/smart-money-moves-to-make-now-that-pennies-are-going-extinct/
[21] https://www.cbsnews.com/news/treasury-penny-mint-to-stop-making-pennies/
[22] https://www.nbcnews.com/business/consumer/treasury-dept-winding-penny-production-rcna208522
[23] https://www.cnbc.com/2025/02/10/what-end-of-the-penny-means-for-the-economy-piggy-banks-and-prices.html
[24] https://home.treasury.gov/system/files/266/23.-Mint-FY-2024-BIB.pdf
[25] https://www.cnn.com/2025/05/22/business/us-discontinue-penny
[26] https://thehill.com/homenews/nexstar_media_wire/5313817-us-is-ending-penny-production-how-will-you-be-impacted/
[27] https://www.forbes.com/sites/dougmelville/2025/02/11/is-eliminating-the-penny-equitable-its-cost-taxpayers-250000000-over-the-past-two-years/