State lawmakers rush to set rounding rules for when there are no pennies

The Treasury Department has said it will continue circulating the roughly 114 billion pennies that exist for “as long as possible.” Pennies must still be accepted as payment.

One solution to the penny problem is rounding to the nearest nickel, using a practice called symmetrical rounding. If the final price, after taxes, ends in one, two, six or seven cents, payment in cash rounds down. For example, $1.91 or $1.92 becomes $1.90. If the price ends in three, four, eight or nine, cash payment rounds up. For $1.98 or $1.99, the consumer pays $2.

A bill introduced last year in Congress and passed out of the House financial services committee would apply symmetrical rounding across the country. U.S. Rep. Lisa McClain, R-Mich., said in an email the federal law is important to prevent a “confusing patchwork of state policies.”

The bill hasn’t been voted on in the House and would still need to move through the U.S. Senate before reaching Trump’s desk.

Some states are looking to what's next

In the meantime, bills to deal with penniless cash transactions have passed both chambers and await the governor's signature in Arizona, Florida, Oregon, Tennessee, Virginia and Washington. Some states are proposing to allow businesses to round cash purchases, while others consider requiring it.

In Indiana, a bill signed into law this month by Republican Gov. Mike Braun tells businesses they must round cash purchases for all transactions that do not end in a zero or five. Lawmakers revised that provision in a second bill that makes rounding optional, which would take effect Sunday if Braun signs it into law.

In both bills, Indiana businesses can choose to always round cash purchases up to the nearest nickel, always round down or round up or down depending on the amount.

In Republican-led Tennessee, legislation makes symmetrical rounding exempt from legal claims under a state consumer protection law but does not require rounding.

“It is to provide safe harbor for private businesses,” said Republican Rep. Charlie Baum, the bill sponsor in Tennessee, during floor debate.

Rounding bills have been introduced in about two dozen states since late last year, according to an Associated Press analysis using the bill-tracking service Plural.

Outside of lawmaking bodies, some state agencies have published guidelines to advise that rounding should happen after tax, and that businesses must make sure the full taxed amount still goes to the state.

Will consumers pay more with rounding?

Cash isn’t used as ubiquitously since the rise in electronic payment methods. Still, about 8 in 10 U.S. adults said they recently used cash in a 2024 survey conducted by the Federal Reserve. Cash was more often used by older adults and those in lower-income households.

The Treasury wrote online that prices would be “rounded down just as often as they will be rounded up, so there should be no overall effect on consumer prices.”

But researchers at the Federal Reserve Bank of Richmond used a 2023 survey to show prices that didn’t end in zero or five were especially likely to end in eight or nine. Payment amounts could be different when multiple items are purchased or depending on the tax rate, but overall, prices more often being rounded up would lead to millions of dollars gained by businesses and lost by consumers collectively, amounting to a few pennies lost per person.

Do people think it's fair?

As businesses have introduced rounding, some Americans have taken to social media to say they feel scammed, even if it is a penny or two at a time.

Nikki Capozzo-Hennessy, 50, said she tends to pay in cash because it makes her more conscious of her spending. The Trumbull, Connecticut, resident posted her grocery store receipt online when she noticed the rounding adjustment on a purchase of $8.73, with tax. The store chose to round down and she gained three cents.

Capozzo-Hennessy said it might feel taxing if she had to hand over extra pennies every time, but she also thinks it’s practical to stick with one rule. She runs a food truck business and said they’d likely use symmetrical rounding to be consistent.

“At the end of the day it’s three cents, but I can imagine with all the purchases that you make, it can add up,” Capozzo-Hennessy said.

Washington state Rep. April Berg, who introduced a rounding bill there, said she understands people who feel frustrated losing a penny but that the elimination of the hard currency leaves little option.

“We did make sure that everyone is allowed to pay exactly what they owe,” Berg said of her legislation.

What about the nickel?

The Treasury says ceasing penny production will save $56 million annually, but rounding could increase demand for nickels. The 5-cent coins also are costly to make, reaching nearly 14 cents each in 2024, according to the Mint.

The proposed federal legislation currently includes a potential cost-saving solution, allowing the Treasury to adjust the coin’s composition to use cheaper zinc and nickel instead of copper and nickel.