Penny Shortage Leads to Pricing Rounding: New Sales Tax Rules Emerging Across States

The U.S. Mint discontinued production of the penny at the end of 2025, creating a nationwide shortage that is now affecting businesses of all sizes. As pennies become increasingly scarce, many retailers have begun rounding cash transactions to the nearest five cents. This shift has raised questions about how sales tax should be calculated when the purchase price is rounded.

To address the issue, several states-including Iowa, Kentucky, Florida, North Carolina, South Carolina, and Texas-have issued official guidance directing taxpayers to calculate sales tax based on the actual sales price before any rounding occurs. In these states, the rounding adjustment applies only to the final amount paid by the customer, not to the taxable base.

Other states have enacted or proposed legislation mirroring this approach, aiming to ensure consistent tax calculations despite the change in currency availability.

As more businesses adapt to a penny-less environment, additional states are expected to release similar guidance or pass legislation to clarify their sales tax rules. Companies should continue to monitor state updates to remain compliant as these changes evolve.