The US Mint announced this morning that they will phase out the production of new pennies beginning in late 2022, and mint the last batch of pennies on April 1, 2023.
The final batch of pennies will be released in proof sets which will be auctioned off to coin collectors with the proceeds going toward our national debt.
The last run will be limited to 50,000 proof sets, and opening bidding is expected to start at $179.99, which is affordable, considering you will own a piece of US numismatic history.
High Cost of Making New Pennies to Blame
The announcement follows years of speculation regarding when the US would stop minting pennies, as it actually costs more than 1 cent to produce a penny.
On average, pennies cost just over 2 cents to make, making penny production a losing proposition, especially when the US Mint produces billions of pennies annually. According to GovTrackInsdier.com’s analysis of the U.S. Mint’s annual report (the most recent report available), “taxpayers lost about $85.4 million from penny production and $33.5 million from nickel production last year.”
Add the fact that “a penny just doesn’t buy what it used to,” and it’s clear the US Government is making the right decision by eliminating the penny.
There is no indication at this time that the U.S. Mint will stop producing nickels. It will likely take several years of living without pennies before we fully understand the impact of removing coins from circulation.
What Will Happen to All the Pennies?
Pennies will remain legal tender, but you will be hard-pressed to find stores willing to accept them after April 1, 2023, for two reasons.
The first and most obvious reason stores will stop providing pennies as change is because the US Mint will impose additional handling fees for purchasing or processing rolls of pennies.
Finally, the US Mint will institute a penny buyback incentive.
Starting in late 2022, the US Government will begin “Pennies for Freedom,” a penny reclamation campaign designed to collect the estimated 23 trillion unused pennies sitting in people’s homes and coin jars.
The pennies will then be melted and the copper will be used for green energy projects throughout the US. This is part of the Biden Administration’s plans for reducing US dependence on foreign energy.
How Will Stores Handle Transactions Without Pennies?
We are moving toward a cashless society and most transactions are handled electronically with credit cards, ATM cards, peer to peer purchasing systems such as Venmo or Zelle, or even with an old-fashioned check. The emergence of Bitcoin, Etherium, and other cryptocurrencies has also been cited as a growing reason for the decline of the penny. So eliminating the penny won’t actually affect most people.
For people who insist on paying cash, the US Mint recommends that stores round up or down to the nearest nickel.
Note: As a side effect, expect state and local sales taxes to increase to round up to the nearest nickel as well to make accounting easier for stores and cashiers.
Eliminating the Penny Benefits Everyone!
No more pennies means we all win! It is estimated the average person loses $38.92 in pennies throughout their lifetime. Change will be easier to count and manage, and purses will be lighter. No more looking under car seats, under couch cushions, sifting through the coin jar, etc.
I’m looking forward to it already!
Penny Fun Facts:
- It costs more than 1 cent to make a penny – Snopes.
- It is illegal to melt US coins to sell for scrap metal – US Mint.
- Composition of the US Penny – US Mint.
- Penny Specifications – US Mint.
- US Penny – Wikipedia.
- Efforts to eliminate the US Penny – Wikipedia.
- A Penny Saved is Worth More Than a Penny Earned – Cash Money Life.
$$$ And if you haven’t figured it out by now – Happy April Fools Day! 🙂
Disclaimer: No pennies were harmed in the writing of this blog article. All facts, figures, and other information were made up on the spot or carefully edited for effect, except for the Penny Fun Facts, which lead to legitimate sources of information.
penny photo credit: Nbauer.