In 2025 the United States Department of Treasury (US Treasury) announced that it would cease manufacturing new pennies. The Federal Reserve will continue to recirculate the approximately 114 billion pennies currently in existence; however, the actual availability of pennies for retailers to make change can vary and largely depends on consumer behavior.
As pennies fall out of circulation, merchants will need to round transactions either up or down to the nearest 5 cents. According to the US Treasury, it is ultimately up to the state and local jurisdictions to amend their sales tax laws to address the rounding of transactions and any other related statutes.
Rounding of In-Person Cash Transactions.
The total price of any in-person cash transaction may be rounded to the nearest 5 cent increment as follows:
Transactions made by another form of payment, including credit and debit cards, may not be rounded.
Mixed-Tender Transactions.
For mixed-tender transactions, any amount paid by a customer in cash must first be applied to the sales price of the goods or services, and any remaining balance may be paid through electronic or noncash methods. Rounding is not applied to any portion of the transaction paid by noncash methods.
Rounding by Agencies.
State and local agencies may round in-person cash transactions as authorized when pennies are not available, but must remit to the state any applicable tax, fee, or charge.
Tax Obligations.
Rounding applies solely to the payment amount tendered and does not alter the sales price, or the amount of tax owed or collected. Any person selling goods or services must calculate and remit all taxes and fees imposed by state or municipal taxing authorities based on the sales price before rounding.
The state business and occupation tax does not apply to amounts received from rounding up as authorized, nor is any deduction allowed for rounding down as authorized.
The state sales and use tax must be calculated on the selling price of goods, services, or other products subject to such tax without regard to any rounding. The amount of tax due may not be rounded.
Preemption and Liability.
Rounding as authorized: (1) preempts any inconsistent local ordinance, regulation, or rule; (2) is not actionable under the Consumer Protection Act; and (3) does not violate any state or municipal requirement, law, regulation, or standard.
Defined Terms.
"Legal tender" means all coins and currencies of the United States.
"Total price" means the final amount due and payable by the buyer for the purchase of any good, service, or other product, or combination thereof, after all applicable taxes and fees are applied, as well as any discounts or other adjustments that are made by the seller.
"Transaction" means the entire purchase by a buyer from a seller for all goods, services, and other products, at that date and time as is shown on an invoice or receipt. A transaction may include one item or multiple items.
(In support) This bill will address an issue created by the federal government ending the production of pennies. Pennies are still in circulation at this time, but banks are no longer providing them on request, and the federal government has not provided any guidance to the states on how to proceed. Businesses are struggling to provide exact change to consumers. This issue is costing businesses time and money and causing frustration for customers. The state needs clear and consistent rules for rounding cash transactions.
The bill establishes a system of asymmetrical rounding. The bill rounds to the nearest nickel. Many stores are already rounding up and down in that manner, but without official guidance from the state. Guidance has been requested from the DOR, but the DOR has not yet issued any guidance.
The rounding rules only affect cash payments. Electronic payments will continue to reflect exact prices.
This legislation is supported, but should be amended to clarify rounding does not affect tax transactions, violate consumer protection laws or local ordinances, or violate the SNAP equal treatment rule. The bill should also be amended to make rounding permissive rather than mandatory.
The bill will help businesses update their point-of-sale systems and provide certainty to employers and customers.
This legislation reflects modern commerce where pennies are rarely used and often cost more to handle than their face value.
(Opposed) None.
Representative April Berg, prime sponsor; Anthony Mixer, Citizen Volunteer Lobbyist; Amber Carter, WA Retail Association; Molly Pfaffenroth, Washington Food Industry Association; and Brandon Houskeeper, NW Grocery Retail Association.