(The Center Square) – A Tennessee bill would guide businesses on how to handle the disappearing penny.
The federal government ended penny production in 2025. States have autonomy on how to handle cash transactions.
Rep. Charlie Baum, R-Murfreesboro, introduced a bill Tuesday that would allow public and private entities to round transactions to the nearest nickel.
House Bill 1744 says that transactions that are 1 to 5 cents or 5 to 6 cents would be rounded down to the nearest five-cent interval. Anything 3 cents or more, or between 7 and 9 cents, would be rounded up to the closest 5-cent interval, according to the bill.
The bill does not apply to electronic transactions.
Taxes would be assessed on the exact amount of the transaction, not on what was rounded up or down, according to the bill.
Comptroller of the Treasury Jason Mumpower is advising local governments to encourage customers to give the exact change when paying with cash. Governments could also consider not accepting noncash payments or adjusting fees and charges to the nearest 5-cent interval.
“Each community is different, and local leaders should adopt policies that make sense for their residents while staying within their legal authority,” Mumpower said.
The end of penny production presents a dilemma for state legislatures, which could need bills that would address “rounding clarity” and legal risks, the National Conference of State Legislatures said in a report.
“Notably, the federal government did not issue any regulations around the end of production, continued to treat the penny as legal currency and initially expected that the Federal Reserve would continue to accept and supply pennies while supplies last,” the report says. “Finally, states will need to consider whether federal guidance and/or regulation and legislation is necessary to meet their objectives,”
The U.S. Mint cited cost as the reason for ending penny production, saying each penny costs 3.7 cents to produce.
