What The Common Cents Act Means For Retail

Gavel and Money

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The national authorities stopped producing pennies for wide circulation earlier Congress had a model for businesses to run without them. The Common Cents Act seeks to supply immoderate clarity and has now passed some chambers of Congress successful substantially matching forms. The House passed H.R. 3074 connected July 14, 2026. On August 7, the Senate passed S. 1525 aft adopting a substitute amendment that brought it substantially into alignment pinch the House-passed bill.

The measure could yet supply retailers ineligible screen to information rate transactions to the nearest 5 cents erstwhile nonstop alteration cannot beryllium provided. Transaction totals for physics and paper payments would stay unchanged. Because the House and Senate passed abstracted legislative vehicles, an identical measure must still clear some chambers earlier it tin beryllium sent to the president.

Even arsenic the authorities advances, the deficiency of a azygous nationalist model has near states pinch the load of stepping successful to supply their ain rules and guidance. Meanwhile, retailers must contend pinch penny shortages, varying authorities policies, compliance concerns and operational challenges.

The Policy Landscape For The Penny Phaseout Is Far From Mint Condition

Calls for the extremity of the penny date backmost to the 1980s, pursuing increases successful the value of copper. Since 2006, the costs to nutrient the penny has outpaced its value, resulting successful astir 2 decades of reported losses by the Mint.

Action began successful February 2025, pursuing calls from President Trump directing the Treasury Department to cease accumulation of the penny arsenic portion of his “commonsense agenda.” Trump-appointed Treasury Secretary Scott Bessent subsequently complied pinch this request.

The afloat legality of this action, however, is questionable, arsenic Congress holds the exclusive powerfulness to coin money and modulate each shape of rate per Article I, Section 8, Clause 5 of the U.S. Constitution. However, existing national rule besides directs the Treasury caput to mint authorized coins successful amounts the caput determines are basal to meet the country’s needs. The Treasury Department has cited that statutory discretion arsenic its authority to suspend penny production. Despite this, Congress has not opposed these actions and is alternatively reviewing the bill.

If enacted, the Common Cents Act would formally amend the U.S. Code to prohibit the Treasury from producing one-cent coins for wide circulation. With accumulation of pennies already halted, the bill’s astir contiguous value is its guidance connected rounding. When nonstop alteration cannot beryllium provided, rate totals that extremity successful one, two, six aliases 7 cents whitethorn beryllium rounded down to the nearest magnitude divisible by five. Totals ending successful three, four, 8 aliases 9 whitethorn beryllium rounded up. The measure besides provides an replacement wherever retailers “may” simply information successful favour of the customer to amounts divisible by five, either down erstwhile a customer owes aliases up for the magnitude of rate alteration aliases a refund owed to the customer.

The connection “may” wrong the measure is important. The measure would supply retailers pinch the authority to round, alternatively than mandating that they do so. Its provisions only pertain to the last totals of rate transactions successful the arena that nonstop alteration cannot beryllium provided. Checks, gift cards, in installments cards, physics transfers and different noncash payments would proceed to settee to the cent. The favoritism betwixt rate and non-cash payments is besides important for retailers arsenic the penny phaseout poses respective compliance challenges.

The Compliance Questions Are Adding Up With SNAP And State Rounding Rules

Existing pennies stay ineligible tender and will proceed circulating, creating aggregate pricing scenarios astatine checkout. A transaction could settee astatine its nonstop worth erstwhile pennies are available, astatine a rounded worth erstwhile they are not, aliases astatine its nonstop worth erstwhile paid electronically. Those differences raise compliance questions involving Supplemental Nutrition Assistance Program (SNAP) customers and authorities aliases section laws governing rate acceptance and costs parity.

The measure does not specifically reside the handling of SNAP payments. Federal rule requires eligible foods to beryllium offered to SNAP customers astatine the aforesaid prices and connected the aforesaid position arsenic those for rate payments, isolated from that SNAP purchases are exempt from income tax. Because SNAP is paid electronically, those transactions would stay nonstop nether the bill. In a jurisdiction wherever groceries are tax-exempt, a SNAP customer pinch an eligible-food full of $10.02 would salary the afloat $10.02, while a rate customer purchasing the aforesaid handbasket whitethorn person the full rounded down to $10.00. Although the merchandise value technically remains unchanged, the retailer absorbs the rounding adjustment, making it economically balanced to a discount for the rate customer.

In jurisdictions that taxation groceries purchased without SNAP, the rumor becomes moreover much analyzable because the taxation remains fixed while the retailer absorbs immoderate downward rounding adjustment. The measure does not expressly reside SNAP-specific questions involving adjacent treatment, accounting practices, aliases mixed-tender transactions. This is only 1 furniture of complexity presently facing retailers astatine the authorities level.

In the absence of an enacted national framework, 20 states person passed immoderate shape of penny-related legislation, pinch galore others nether reappraisal aliases having provided charismatic guidance. The scope and wording alteration considerably from authorities to state. Laws successful Minnesota, Oklahoma and New Mexico chiefly reside authorities payments, while Utah’s authorities is constricted to rate liquor sales. These laws do not found broad statewide rules for emblematic transactions.

Additional conflicts whitethorn originate successful jurisdictions that prohibit rate customers from paying much than customers utilizing different costs methods, a norm symmetric rounding tin break erstwhile a rate full rounds up. This patchwork of regulations creates a fragmented landscape, peculiarly for businesses operating crossed aggregate jurisdictions.

Can Retailers Bank On The Common Cents Act’s Section 4 Safe Harbor?

Both the House- and Senate-passed versions of the Common Cents Act effort to trim these uncertainties done a Section 4 safe harbor. Under Section 4, businesses adhering to the bill’s authorized rounding provisions “shall not beryllium successful violation” of federal, state, tribal aliases section requirements based connected that adherence. This constituent of the measure is simply a captious request for retailers operating crossed aggregate jurisdictions.

Context matters. Although the Common Cents Act would connection retailers important ineligible protections, it will not create a azygous operational model connected its ain aliases destruct the broader patchwork and challenges that travel pinch it.

Until the authorities is enacted and clearer nationalist guidance is implemented, retailers and states could walk a beautiful penny calculating the alteration ahead.