Why the U.S. Mint Is Retiring the Penny
The U.S. Mint announced it will stop producing new pennies once existing blank supplies run out in early 2026. The Federal Reserve has already halted redistribution across the country, creating regional shortages. Armored carriers are declining to transport them, and many banks can no longer balance their own supply.
While that may sound minor, this small change could have big operational consequences for how businesses process and record transactions.
How the End of the Penny Affects Transactions and Pricing
Once pennies are officially retired, transactions will be rounded to the nearest nickel. What’s still unclear is how that rounding will occur. Will businesses be required to round down, as some Congressional proposals have suggested? Or will they be allowed to round to the nearest value?
There’s also the question of scope. In other countries that have eliminated low-value coins, such as Canada and Australia, rounding applies only to cash payments. Digital transactions remain exact. But until the U.S. Treasury releases official guidance, it’s uncertain whether those same rules will apply here.
Operational and Accounting Risks for Business Owners
For many companies, particularly those that rarely handle cash, the change might not be immediately disruptive. But for businesses in retail, hospitality, or event-based operations, rounding can complicate systems and reporting if not addressed early.
Here’s what accounting teams and business owners should review now:
- Accounting systems: Can your ERP, POS, or billing software handle rounding logic at the transaction level?
- Sales tax reporting: How will fractional rounding affect the accuracy of tax filings and reconciliations?
- Cash management: If you still accept cash, what are your procedures for over- or under-payments once the penny disappears?
- Customer experience: How will you communicate these changes to consumers, especially if transactions are rounded down?
A CFO’s Perspective on Readiness
Kaplan CFO, Chris Grissom, recently discussed the topic with banking contacts and shared: “My clients do very little with cash except at a few annual events, so we may feel the impact later… but it’s coming.” His point underscores that every company—whether retail or service-based—should anticipate the change and verify systems now.
The removal of the penny isn’t just a cultural shift. It’s a technical one. Systems referencing $0.01 increments, rounding rules, or tax mappings will need updates before 2026.
November Update: McDonalds Phases Out the Penny Nationwide
In November 2025, McDonald’s became one of the first major corporations to implement rounding practices ahead of the federal phase-out. The company announced it will round all transactions to the nearest five cents, citing the U.S. Treasury’s decision to halt penny production nationwide.
According to Today.com, the policy applies only to cash transactions—menu prices remain unchanged. For example:
- Totals ending in 1¢ or 2¢ round down to 0¢
- 3¢ or 4¢ round up to 5¢
- 6¢ or 7¢ round down to 5¢
- 8¢ or 9¢ round up to 10¢
The change offers a preview of what other cash-handling businesses may soon experience once federal rounding guidelines are finalized.
*Image credit: Bear Family Restaurants / McDonald’s franchise notice
What Businesses Should Do to Prepare
Even small regulatory changes can create ripple effects across financial controls, reporting accuracy, and cash flow visibility. Proactive accounting teams can get ahead by:
- Contacting ERP and POS vendors to confirm software readiness.
- Reviewing pricing and tax tables for rounding dependencies.
- Updating internal financial policies related to cash handling.
- Communicating early with accounting teams, bookkeepers, and external auditors.
At Kaplan CFO Solutions, our CFOs anticipate change before it impacts your balance sheet. From financial systems design to compliance updates, we help businesses adapt to evolving market and policy conditions—turning potential disruption into operational readiness.