Pennies to Heaven: House Passes Bill to Kill the Coin

The U.S. House of Representatives passed legislation that would direct the Treasury Department to stop producing pennies and establish a rounding framework for cash transactions.

The Common Cents Act, sponsored by Representatives Lisa McClain (R-MI) and Robert Garcia (D-CA), followed a directive from President Trump ordering the Treasury to stop making pennies because production costs exceed their face value. Under the legislation, a seller could round a cash transaction up or down to the nearest 5 cents when exact change cannot be provided. Section 3(e) states that nothing in the Act may be construed to require any person to round a payment. Noncash payment methods, such as checks and credit cards, would not be subject to rounding.

The version the House passed is broader than the bill introduced last year, adding Federal Reserve reporting requirements and new procedures for retiring any circulating coin. The updated text requires the Treasury Department to give 60 days' advance notice before discontinuing any circulating coin. It also provides that the 5-cent coin may have an inner layer of zinc and an outer layer of nickel, and lets the Treasury Secretary prescribe that composition subject to testing showing it reduces production cost and, to the greatest extent practicable, has minimal adverse impact on coin-accepting machines.

The American Bankers Association supported an earlier version of the bill (see prior coverage), arguing that ending penny production while preserving the legal tender status of existing pennies would modernize the coinage system and reduce handling costs. The legislation now heads to the Senate.