US House Passes Common Cents Act to Phase Out Penny, Proposing New Cash Transaction Rules
The U.S. House of Representatives has advanced legislation that would standardize cash transactions as the nation transitions away from the one-cent coin. The recently passed Common Cents Act aims to provide clear guidelines for businesses and consumers, streamlining the process of rounding cash payments in an economy where pennies are becoming increasingly scarce and costly to produce.
Details on the Common Cents Act and its Implications
On July 14, 2026, the U.S. House of Representatives passed the Common Cents Act, a pivotal piece of legislation designed to regulate cash transactions amidst the ongoing phase-out of the penny. Authored by Clay Halton, the bill was introduced to address the growing challenges faced by retailers and restaurants due to the declining circulation of the one-cent coin. With the U.S. Mint having halted penny production in late 2025, primarily due to the high cost of manufacturing – nearly four cents per coin – a standardized approach to cash payments has become imperative.
According to Sean Kennedy, Chief Advocacy Officer for the National Restaurant Association, inconsistent rounding practices have created significant legal liabilities and financial losses for businesses. The association estimates that without a federal standard, restaurants alone could incur losses of up to $168 million annually. This is particularly relevant given that approximately one-quarter of all restaurant customers continue to pay with cash, impacting millions of daily transactions.
If enacted, the Common Cents Act would introduce a system where only cash transactions are subject to rounding. Electronic payments, taxes, and advertised prices would remain calculated to the exact cent. The proposed rounding rules are as follows: totals ending in 1, 2, 6, or 7 cents would round down to the nearest nickel, while totals ending in 3, 4, 8, or 9 cents would round up. Totals already ending in 0 or 5 cents would remain unchanged. Importantly, existing pennies would retain their legal tender status and could still be used or deposited at financial institutions.
This legislative move is not unprecedented. Countries such as Canada, Australia, New Zealand, and Sweden have successfully eliminated their lowest-denomination coins and implemented similar cash-rounding systems. Canada, for instance, phased out its penny in 2012, adopting an almost identical rounding method. The Canadian government projected annual savings of approximately 11 million Canadian dollars and noted reduced handling costs for businesses and financial entities. Research from institutions like the Federal Reserve Bank of St. Louis suggests that symmetrical rounding, where amounts round up and down with equal frequency, minimizes the overall financial impact on consumers.
The bill now proceeds to the Senate for consideration. If approved there, it will head to President Trump's desk for signature, establishing a uniform federal standard for cash transactions across the nation.
The move to phase out the penny and implement a standardized rounding system represents a practical and financially sound evolution of monetary policy. It reflects a growing recognition of the economic inefficiencies associated with low-value currency production and circulation. By learning from the experiences of other nations, the U.S. can streamline its payment systems, reduce operational burdens for businesses, and potentially realize significant cost savings. This transition, while requiring an initial adjustment, promises a more efficient and less cumbersome transactional landscape for both consumers and enterprises in the long run.
