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The U.S. Treasury has announced it will phase out the production of pennies, marking the end of an era for the one-cent coin. This decision comes as the cost of producing a penny has risen to nearly four cents, making it economically unfeasible.
President Donald Trump initiated the move in February, emphasizing the need to eliminate wasteful spending. The Treasury estimates that halting penny production will save taxpayers $56 million annually, though some reports suggest savings could be as high as $85 million.
The final order of penny blanks has been placed, and the U.S. Mint will continue to manufacture pennies only until the current inventory is exhausted. After that, businesses will need to round cash transactions to the nearest nickel, a practice already common in countries like Canada and Australia, which have phased out their one-cent coins.
Despite the cost savings, some concerns remain. The production of nickels, which costs about 14 cents per coin, could offset the savings from discontinuing pennies. Treasury Secretary Scott Bessent expressed confidence that changes in nickel composition could help balance production costs.
While pennies will remain legal tender, their removal from circulation may lead to adjustments in cash transactions. With less than one in five payments made with cash, the impact is expected to be minimal. The decision reflects a broader trend toward reducing small denomination coins, as seen in other countries.