Financial News: Saying Goodbye To The Penny To Cost U.S.

Saying Goodbye To The Penny To Cost U.S. Consumers $6 Mln In 'Rounding Tax'

07/09/2025 - 17:02:00 (RTTNews)

(RTTNews) - Phasing out the penny is set to involve some cost to U.S. consumers paying in cash as businesses are set to round transactions to the nearest nickel, new research from the Federal Reserve Bank of Richmond revealed on Wednesday.

The U.S. government is set to end the production of new pennies, which has become a loss-making process, early next year.

In 2024, the Treasury incurred an $85.3 million seigniorage loss, which is the difference between the face value of the small coin and the cost to produce it, from minting over three billion new pennies. According to the U.S. Mint, producing and distributing a single penny costs 3.69 cents, nearly four times its face value.

Based on the 2023 Diary of Consumer Payment Choice, economists at the Richmond Fed calculated that eliminating the penny and rounding to the nearest 5 cents is set to result in a "rounding tax" that could cost about $6.06 million annually to U.S. consumers.

The DCPC is a Federal Reserve-sponsored survey that tracked real payments from a nationally representative sample of consumers over a three-day period between September 29 and November 2, 2023.

The Richmond Fed economists also explored the scenario of eliminating the nickel in addition to the penny. That move could raise rounding costs significantly to $56 million a year to American consumers, the study found.

For comments and feedback: contact editorial@rttnews.com

Market News provided by RTTNews

RECENT INTERNATIONAL FINANCIAL NEWS

Japan Producer Prices Slip 0.2% In June (37 min(s), 11 sec(s) ago)
(RTTNews) - Producer prices in Japan were down 0.2 percent on month in June, the Bank of Japan sai ...Full Story»

Korea Rate Decision On Tap For Thursday (02 hr(s), 47 min(s), 11 sec(s) ago)
(RTTNews) - The Bank of Korea will wrap up its monetary policy meeting on Thursday and then announ ...Full Story»

Saying Goodbye To The Penny To Cost U.S. Consumers $6 Mln In 'Rounding Tax' (03 hr(s), 47 min(s), 11 sec(s) ago)
(RTTNews) - Phasing out the penny is set to involve some cost to U.S. consumers paying in cash as ...Full Story»

U.S. House Purchase Mortgage Applications Highest In Over 2 Years: MBA (04 hr(s), 53 min(s), 11 sec(s) ago)
(RTTNews) - Home loan applications in the U.S. rose to their highest level since early 2023 in the ...Full Story»

Fed Minutes Reveal Mixed Views About Outlook For Interest Rates (06 hr(s), 26 min(s), 11 sec(s) ago)
(RTTNews) - The Federal Reserve on Wednesday released the minutes of its June monetary policy meet ...Full Story»

Ten-Year Note Auction Attracts Slightly Above Average Demand (07 hr(s), 36 min(s), 11 sec(s) ago)
(RTTNews) - Continuing this week's series of announcements of the results of its long-term sec ...Full Story»

U.S. Crude Oil Inventories Unexpectedly Jump By 7.1 Million Barrels (10 hr(s), 13 min(s), 11 sec(s) ago)
(RTTNews) - A report released by the Energy Information Administration on Wednesday showed an unex ...Full Story»

U.S. Wholesale Inventories Dip In Line With Estimates In May (10 hr(s), 32 min(s), 11 sec(s) ago)
(RTTNews) - A report released by the Commerce Department on Wednesday showed a modest decrease by ...Full Story»