Treasury Guidance on Cent Phaseout

On December 23, the U.S. Treasury released recommendations for businesses on how to handle cash transactions now that the cent is no longer being produced. The “non-binding guidance” is formatted as FAQs and can be found on the Treasury’s website. The high points are summarized below.

Circulating Cents

People can continue to spend and deposit 1-cent coins. The Treasury states that the cent will retain its full monetary value indefinitely, and the Federal Reserve plans to continue recirculating the roughly 114 billion cents in existence for as long as possible. Exactly how long depends largely on consumer behavior, so the Treasury encourages the public to spend the cents they have at home “to support a smooth transition and allow retailers and point-of-sale (POS) system providers time to adapt.”

Rounding Procedures

The Treasury advises retailers to continue accepting cents and to provide cents in change for cash transactions. As cents fall out of circulation, merchants will need to round cash transactions either up or down to the nearest five cents. The government points to recent guidance from the National Council of State Legislators, which recommends that businesses adopt the practice of symmetrical rounding—if the final digit of the total transaction amount (including taxes) is 1, 2, 6, or 7 cents, the amount is rounded down to the nearest multiple of five. If the final digit is 3, 4, 8, or 9 cents, the amount is rounded up. With this method, “final transaction prices will be rounded down just as often as they will be rounded up, so there should be no overall effect on consumer prices.” Rounding rules would not apply to payments made via credit cards, gift cards, checks, etc., or foreign or electronic transactions. When it comes to refunds, businesses set their own policies.

Sales Tax

The Treasury states, “The amount of sales tax is determined by state and local law, but in general, rounding for cash transactions should not impact the amount of sales tax consumers are required to pay. We anticipate that sales tax will continue to be calculated based on the exact total of a purchase before any rounding is applied. Individual states may approach this issue differently based on unique considerations.” For more information on how the phaseout of the cent may affect sales taxes and income taxes, the Treasury directs citizens to consult their state’s tax authority for specific guidelines and updates.

A version of this article appears in the February 2026 issue of The Numismatist (money.org).