Arizona Mandates Penny Rounding as Coin Production Ends
Finn's Take· TL;DR- Arizona implements "Swedish rounding" system rounding cash transactions to nearest 5 cents after penny production halted.
- Rounding applies only to cash purchases and balances gains/losses fairly, though may slightly favor businesses overall.
- Similar bills pending in multiple states; federal legislation proposed to create uniform national rounding standards across country.
Breaking New Ground in Cash Transactions
Arizona Governor Katie Hobbs signed House Bill 2938 Friday, mandating that businesses round to the nearest 5 cents if pennies are not available to complete a transaction. The groundbreaking legislation makes Arizona a leader in addressing the practical challenges created by the federal government's decision to halt penny production.
The Secretary of the Treasury ceased penny production November 12, 2025. Each of the coins actually costs about 3.7 cents to produce. With businesses increasingly unable to provide exact change in pennies, the new law provides a systematic solution to what was becoming a daily frustration for retailers and consumers alike.
How the Swedish Rounding System Works
Under HB 2938, when a cash purchase total ends in 1¢, 2¢, 6¢, or 7¢ it is rounded down to the nearest 5¢, and when it ends in 3¢, 4¢, 8¢, or 9¢ it is rounded up to the nearest 5¢; totals ending in 0¢ or 5¢ are unchanged. This method, known as Swedish rounding, ensures fairness by balancing gains and losses over multiple transactions.
The rounding method is applied after all taxes have been properly calculated, preserving tax integrity and ensuring transparency at the point of sale. Any business that is subject to this bill will be required to post a notice alerting its customers to the rounding-up method. The law applies only to cash transactions, leaving credit and debit card purchases unaffected.
Broader Implications and Business Response
Similar bills to Arizona's are being considered in Florida, Oregon, Tennessee, Virginia and Washington. Rounding bills have been introduced in about two dozen states since late last year. The movement reflects a growing recognition that the penny shortage requires legislative solutions rather than ad-hoc business decisions.
Lisa Bednar, president of the Arizona Food Marketing Alliance, said her members are supportive, calling it "a simple, common-sense update that gives retailers clear, consistent rules for handling small-coin shortage at the register." Researchers at the Federal Reserve Bank of Richmond found that prices more often being rounded up would lead to millions of dollars gained by businesses and lost by consumers collectively, amounting to a few pennies lost per person.
Looking Ahead to Federal Action
A bill introduced last year in Congress and passed out of the House Financial Services Committee would apply symmetrical rounding across the country. U.S. Rep. Lisa McClain, R-Mich., said the federal law is important to prevent a "confusing patchwork of state policies." The federal legislation has yet to receive a full House vote and would still need Senate approval.
The Treasury Department has said it will continue circulating the roughly 114 billion pennies that exist for "as long as possible." Pennies must still be accepted as payment. Arizona's proactive approach provides a template for other states grappling with the transition away from penny-dependent commerce, potentially influencing how America handles small-denomination transactions in a post-penny economy.