For all the tedious interpersonal politics, BS work-life balance, and client drama within Big 4 machinery we’ve been writing about since 2009, sometimes we forget that firms do, from time to time, offer useful guidance and insight on topics not directly related to professional services and their petty internal squabbles. Like the imminent death of the United States penny.
In case you haven’t heard, the Treasury announced in May that the penny’s two-hundred-ish year run will come to an end in 2026. Cue conspiracy theorists interpreting this as The Powers That Be shoving us toward digital-only currency as part of some nefarious scheme to…IDK. Control and track us or something. Spoiler: They’re already doing that.
Regardless of your belief or lack thereof in a New World Order, considerations will need to be made for what happens to all those spare single cents when a real world token no longer exists to represent them in transactions. You guys are accountants, you get it.
Here’s what PwC said in Phasing out the penny: Preparing for a currency shift without clear rules:
At the Streamlined Sales Tax Governing Board meeting held on May 21, 2025, US Treasury Department Assistant Secretary John York shared plans to discontinue penny production due to rising costs and declining utility. While this announcement signals a significant shift in US currency policy, it is important to note that there is no enacted federal legislation, nor published regulations, to adopt the change. A shortage of pennies in circulation is expected potentially by early 2026.
Guys, please don’t hoard pennies.
Now this is the important bit. As mentioned, it’s likely pennies will start drying up next year but for the moment there isn’t a solid plan or guidance in place. Maybe we’re just going to do this by the seat of our pants and figure it out later, that’ll totally work out, right?
The elimination of the penny introduces uncertainty into pricing approaches, consumer transactions, legal compliance, and, in particular, sales tax calculations. While it is assumed that cash transactions would be rounded to the nearest five cents, no rounding rule to accommodate the elimination of the penny has been adopted by a government body. Additionally, the perspectives of state regulators, the potential for legislative responses, and the stance of consumer protection agencies remain unclear. The absence of uniform direction may cause inconsistency in customer experience, sales tax compliance, and commerce practices. Notably, states currently only round to the penny, and there is no provision for rounding to the nickel at either the item or invoice level.
Our neighbors to the north nixed pennies way back in 2012 so if we need a rough outline on how to pull this off we can always copy Canada’s homework. Their government, much like ours, said pennies cost more to make than they were worth and so just stopped producing and distributing them. At the time, the Canadian government had this clarification: “The penny will retain its value indefinitely and can continue to be used in payments. However, as pennies are gradually withdrawn from circulation, price rounding on cash transactions will be required.” Non-cash payments were not affected.
Because Canadians are an extremely polite people who would totally never rip each other off, they didn’t worry too much about how the rounding would shake out:
Yeah, we Americans need to make sure we have something down on paper about this. Fair, consistent and transparent have multiple meanings depending on who you ask.
Anyway, this is the advice PwC has for businesses, tax authorities, and software providers:
Businesses, tax authorities, and software providers should begin internal planning and identify potential points of impact. Retailers, in particular, should assess how pricing, point-of-sale (POS) systems, and reconciliation procedures may need to be adapted for sales tax calculation, collection, and reporting, and whether rounding at the item or invoice level can be accommodated in jurisdictions where sales tax applies. In addition, retailers should evaluate system capabilities, customer experience implications, general ledger integrity, and historical reporting challenges. They also should monitor federal and state responses due to the current legal ambiguity.
While we’re here, here’s a fun read from the US Mint on the history of the penny. Godspeed little copper-plated zinc one, and thanks PwC for the reminder that no one’s figured out how exactly we’re going to do this yet, very comforting.
