By Kingsville Independent News Staff
Editor’s note: This article is intended to provide general context. Pennies remain legal tender, and there are no known local changes affecting how cash transactions are handled in Kleberg County.
If it feels like pennies are quietly disappearing, you’re not imagining it.
Pennies haven’t been banned, and they remain legal U.S. currency. But according to federal officials and the Texas Comptroller of Public Accounts, a mix of rising production costs and changing consumer habits is making the one-cent coin less common in everyday use.
Here’s what’s happening, and what it actually means.
Did the federal government ban the penny?
No. Pennies are still legal tender.
However, former President Donald Trump said in early 2025 that it costs more to produce a penny than the coin is worth and publicly supported stopping production. Following those statements, the U.S. Treasury and the U.S. Mint moved toward halting or sharply reducing the minting of new pennies, while allowing coins already in circulation to remain in use.
Under federal law, only Congress can formally eliminate a U.S. coin. Treasury officials have emphasized that stopping production does not mean pennies suddenly disappear; it simply means fewer new coins are entering circulation.
So why are pennies becoming scarce?
According to the Texas Comptroller of Public Accounts, the penny shortage has been building for years.
Pennies tend to fall out of circulation more easily than other coins. Many are stored in jars, drawers or cup holders and never spent again. At the same time, banks and businesses have reported increasing difficulty maintaining a steady supply.
With fewer new pennies being produced and fewer older coins returning to circulation, the shortage has become more noticeable, particularly for businesses that still handle a significant amount of cash.
What happens when there aren’t pennies?
That’s where confusion can arise, which is why the Texas Comptroller addressed the issue directly in a recent Fiscal Notes article.
The Comptroller’s office emphasized that sales tax rules have not changed. Taxes are still calculated to the exact cent. Any adjustment occurs only at the very end of a transaction and only when a customer is paying with cash and exact change is not available.
In those cases, the final total may be rounded to the nearest nickel. Payments made by debit card, credit card, check or other electronic methods are not affected.
This type of rounding is not new and is similar to how other countries, including Canada, handled the gradual disappearance of pennies from everyday use.
How the state is handling cash payments
The Texas Comptroller’s office says pennies are still accepted for tax payments and fees. However, when someone pays in cash and exact change is unavailable, the state may round the amount down to the nearest nickel.
According to the Comptroller, this approach is intended to keep transactions moving smoothly and avoid overcharging taxpayers. It is described as a practical response to a coin shortage, not a change in tax policy.
What this means for small businesses
For most small businesses, the penny shortage is less a policy change than a practical adjustment.
Business owners who handle a large volume of cash transactions have already noticed that pennies are harder to obtain from banks and suppliers. The Comptroller’s guidance allows businesses to round cash totals when pennies are unavailable, provided sales tax is calculated accurately first.
In some cases, this may simplify transactions. Less time spent counting exact change can lead to faster checkouts and fewer disruptions at the register. For businesses where most customers already pay electronically, the impact may be minimal.
The Comptroller has emphasized that the guidance is not intended to change prices or tax rules, but to adapt to a growing shortage of low-value coins.
What this means for everyday Texans
For most consumers, the impact will be subtle.
Cash customers may notice they are no longer receiving pennies in change, or that totals are rounded slightly up or down. For those paying by card or electronically, transactions will remain unchanged.
Pennies are still legal tender, and there is no requirement to stop using them. They are simply becoming less common in day-to-day transactions.
The bigger picture
Other countries have phased out low-value coins without banning them outright. Federal officials say the United States is not eliminating the penny, but economic pressures continue to reduce its role in everyday commerce.
For now, the penny remains part of the system, just a quieter one than it used to be.