That jar of pennies collecting dust on your dresser might soon become a conversation piece. Earlier this year, President Donald Trump announced his intent to halt the production of new pennies, citing the inefficiency of minting coins that cost 3.7 cents each to produce yet are worth only one cent. While this change won’t happen overnight, Ohio businesses should begin considering how this potential currency shift could affect their daily operations, particularly when it comes to tax collection and compliance.
The Current Penny Situation
In February 2025, President Trump directed the United States Department of the Treasury to stop producing new pennies. While the United States Constitution grants Congress the power to coin money, the administration appears committed to this change. The Common Cents Act (H.R. 3074 and S. 1525), introduced by a bipartisan group of lawmakers in April, would officially end penny production and establish uniform rules for rounding cash transactions to the nearest nickel.
The federal government, through the National Economic Council and Treasury Department, has already begun reaching out to state tax administrators, retailers, and tax compliance organizations to understand the implications of this change. The Streamlined Sales Tax Governing Board, which Ohio participates in along with 23 other states, is discussing the penny’s elimination during meetings this week.
Ohio’s Current Tax Rounding Rules
Ohio, as a member of the Streamlined Sales and Use Tax Agreement (SSUTA), follows specific rules for calculating and rounding sales tax. Currently, tax is rounded to the nearest penny—up when the amount is 0.5 cents or greater, and down when it’s 0.4 cents or less. Ohio businesses can compute tax either on individual items or on the total invoice but must apply the same rounding rules to the combined state and local taxes.
For example, when calculating the sales tax on a $10 item in Franklin County with a 7.5 percent tax rate, the tax would be $0.75, making the total $10.75. Under current rules, there’s no need to round beyond the penny.
The “Nickels and Dimes” of Potential Changes
If pennies are phased out, businesses may need to:
- Update point-of-sale systems to round final cash transactions to the nearest nickel
- Maintain separate processes for cash versus electronic payments
- Revise accounting systems to properly track and remit taxes
- Consider pricing strategies to minimize negative impacts
The potential changes would affect numerous tax types beyond just sales tax. Fuel taxes, cigarette and alcohol excise taxes, and other taxes calculated to the penny would need adjustments for cash purchases.
A key question emerging in discussions among tax administrators is how to handle the difference between the calculated tax and the rounded amount. If a transaction’s calculated tax is $0.52 but gets rounded up to $0.55 for cash payments, should businesses remit the full $0.55 to tax authorities? If so, how would that extra $0.03 be allocated between state and local governments? Conversely, if tax is rounded down from $0.52 to $0.50, would businesses still be responsible for remitting the originally calculated amount?
Business Impact Varies by Industry
The impact of eliminating pennies would vary significantly across different business types:
Retail businesses with high volumes of low-dollar transactions would feel the greatest effect, potentially needing to adjust pricing strategies to avoid consistently rounding up or down.
Restaurants face unique considerations with tipping, service charges, and the integration of these elements with their point-of-sale systems.
Gas stations already calculate fuel taxes to the thousandth of a cent, adding another layer of complexity to their rounding requirements.
Service businesses that primarily accept electronic payments or send invoices might see minimal impact from the change.
What Ohio Businesses Should Do Now
While the penny’s elimination isn’t imminent, forward-thinking Ohio businesses can take steps to prepare:
- Evaluate your current payment mix (cash vs. electronic) to understand your exposure to these changes
- Consult with your point-of-sale system provider about their readiness and planned updates
- Review your pricing structure, especially for items priced just below whole dollar amounts
- Monitor developments from the Ohio Department of Taxation for state-specific guidance
- Consider how inventory counting and cash reconciliation processes might need to change
The National Retail Federation reports that businesses have expressed interest in potential “safe harbor” provisions that would provide flexibility during the transition. While federal guidance would create a uniform standard nationwide, states will ultimately need to update their own tax codes to address these changes.
Federal vs. State Authority
An interesting aspect of this discussion involves the potential for conflicting approaches between federal and state authorities. While the federal Common Cents Act proposes rounding the final transaction amount (including taxes) to the nearest nickel, states may prefer different approaches that preserve their expected tax revenue.
As Craig Johnson, Executive Director of the Streamlined Sales Tax Governing Board, noted in recent discussions, states will need to ensure that any rounding rules don’t create discrimination issues between cash and electronic transactions, which could potentially violate the Internet Tax Freedom Act.
Ohio businesses should stay alert for guidance from both federal authorities and the Ohio Department of Taxation as this situation develops.
How Rea Can Help
At Rea, our State and Local Tax Services team is closely monitoring these developments. Our tax professionals understand the complexities of tax compliance and can help your business prepare for potential changes to currency and tax rounding rules. Our experienced advisors can provide the guidance you need to manage this transition smoothly.
Don’t wait until the penny drops from circulation to consider how your business will adapt. Contact Rea’s State and Local Tax Services team today to discuss how these potential changes might affect your operations and what steps you can take to prepare. Connect with us to learn more about how we can help.
