A complete substitute amendment. v2 fundamentally alters the approach to cash transaction rounding, changing it from a mandatory requirement in v1 to an optional practice under specific conditions. Additionally, v2 significantly expands the bill's scope by incorporating new provisions for 5-cent coin specifications, establishing a general framework for discontinuing coin circulation, and mandating strategic plans and reports on coin distribution stability, none of which were present in v1.
Common Cents Act
- Sponsor
- Sen. Lummis, Cynthia M. [R-WY]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Aug 10, 2026
Bottom line
The Common Cents Act modernizes U.S. currency by eliminating the penny and streamlining cash transactions through rounding, aiming for efficiency and cost savings while addressing potential impacts on consumers.
What it actually does
This bill directs the Secretary of the Treasury to cease production of one-cent coins for general circulation, while allowing for their continued minting as numismatic items. It establishes a system for rounding cash transactions to the nearest 5 cents when exact change is not available, with specific rules for rounding up or down. Additionally, it grants the Treasury flexibility to modify the composition of the 5-cent coin to reduce production costs and mandates Federal Reserve reports on coin distribution stability and potential impacts on vulnerable communities.
Proponents argue
Supporters argue that ceasing penny production will save taxpayers millions of dollars annually, as the cost of minting a penny far exceeds its face value. They contend that rounding cash transactions will simplify commerce, reduce administrative burdens for businesses, and align the U.S. with other developed nations that have successfully phased out their lowest denomination coins. The bill's provisions for assessing impacts on vulnerable communities demonstrate a commitment to a fair transition.
Opponents contend
Critics often express concern that eliminating the penny and implementing rounding rules could disproportionately affect low-income individuals and the unbanked, who rely more heavily on cash transactions. They argue that frequent rounding up, even by small amounts, could accumulate into a 'rounding tax' over time. Some also cite sentimental value and tradition as reasons to retain the penny, while others worry about potential consumer confusion or initial implementation costs for businesses.
The bill is moderately complex due to specific rounding rules and technical amendments, requiring a careful read to understand its full implications. The estimated reading time is sufficient for an informed reader.
Section 2, amending 31 U.S.C. 5112(bb)
Ceasing Production of One-Cent Coins for General Circulation
This provision directs the Secretary of the Treasury to stop minting one-cent coins (pennies) for general circulation. However, it explicitly allows the Treasury to continue producing and issuing pennies for sale as numismatic (collector's) items. Importantly, all one-cent coins minted before the enactment date of this subsection will remain legal tender, meaning they can still be used for payments.
Supporters argue
Supporters argue that this provision is a fiscally responsible measure, as the cost of producing a penny has long exceeded its face value, leading to taxpayer losses. They also highlight the environmental benefits of reducing the mining and processing of metals. Furthermore, it streamlines cash transactions, making them more efficient for both consumers and businesses.
Critics contend
Critics contend that the penny holds significant sentimental and historical value for many Americans, and its elimination would be a loss of tradition. Some also express concern that while existing pennies remain legal tender, their practical utility will diminish, potentially inconveniencing those who still possess them. There are also arguments that the cumulative effect of rounding could subtly disadvantage consumers.
Tradeoffs
This provision balances the economic efficiency of ceasing production of an unprofitable coin against public sentiment and the potential for minor, though widespread, adjustments in daily cash transactions.
Section 2, amending 31 U.S.C. 5112(a)(5), (b), (c)
Modernizing 5-Cent Coin Composition
This section amends existing law to allow the Secretary of the Treasury to change the composition of the 5-cent coin (nickel). Specifically, it permits the 5-cent coin to be made with an inner layer of zinc and an outer layer of nickel. The Secretary is given authority to prescribe the exact zinc and nickel composition, provided it reduces production costs and has a minimal adverse impact on machines designed to accept coins, such as vending machines.
Section 3
Cash Transaction Rounding Rules
This section establishes the rules for rounding cash transactions to the nearest 5 cents when exact change cannot be provided. For amounts ending in 1, 2, 6, or 7 cents, the amount is rounded down. For amounts ending in 3, 4, 8, or 9 cents, the amount is rounded up. Small transactions of $0.01 or $0.02 are always rounded up to $0.05. The bill also allows rounding in favor of the customer and mandates that employers, if they choose to round cash payments to employees, must round up to the nearest 5 cents. These rules do not apply to non-cash transactions like credit cards or electronic transfers.
Section 4
Federal, State, and Tribal Law Compliance for Rounding
This section provides legal protection for individuals and financial institutions that adhere to the cash rounding provisions described in Section 3. It states that such adherence will not be considered a violation of any Federal, State, Tribal, or political subdivision requirement, law, regulation, or standard. However, it explicitly clarifies that this protection does not excuse noncompliance with laws related to minimum wage, overtime pay, or paid leave, ensuring that employee protections remain intact.
Section 5
Federal Reserve Strategic Plan on Coin Distribution Stability
This section requires the Board of Governors of the Federal Reserve System to develop and submit a strategic plan within 90 days of the bill's enactment. This plan must outline how the Federal Reserve will manage penny orders and deposits at commercial coin terminals to limit disruptions in penny supply and maintain the stability of the coin distribution system. It also requires an assessment by the Secretary of the Treasury, to be delivered to the Board, on the impact of penny cessation and rounding practices on low-income communities, older consumers, and unbanked/underbanked individuals, including recommendations to Congress to address any adverse impacts. The Federal Reserve must then submit follow-up evaluations on the plan's progress.
Section 6, amending 31 U.S.C. 5111(a) and adding (e)
Formalizing Procedures for Discontinuing Coin Circulation
This section establishes a new formal process that the Secretary of the Treasury must follow if they wish to discontinue the minting for circulation of any other U.S. coin (beyond the penny, which is addressed separately). The Secretary must provide at least 60 days' notice to specific Congressional committees, including a detailed explanation of the reasoning (fiscal and operational) and a comprehensive plan for phasing out the coin, considering impacts on consumers, businesses, and the economy. Following this notice, the Secretary must provide a briefing to these committees within 30 days.
Grants the Secretary of the Treasury discretion to prescribe the exact composition of zinc and nickel for the 5-cent coin, subject to testing and evaluation that such composition reduces production cost and has a minimal adverse impact on coin-accepting machines.
Section 2(3), amending 31 U.S.C. 5112(c)
Why it matters:This is standard legislative practice for technical adjustments to existing code. It provides necessary administrative flexibility without requiring a new act of Congress for every minor material change.
Case for: This flexibility allows the U.S. Mint to adapt to fluctuating material costs and technological advancements without needing new legislation for minor adjustments, ensuring ongoing cost efficiency in coin production. It also mandates consideration for machine compatibility, protecting businesses.
Case against: While intended for efficiency, some might argue that granting broad discretion over coin composition could lead to changes without sufficient public debate, though the requirements for cost reduction and minimal machine impact provide some guardrails.
Estimated impact: Potentially millions of dollars in cost savings over time for the U.S. Mint by allowing for more economical material choices, while minimizing disruption to industries reliant on coin-operated machines.
Requires employers, if they choose to round cash payments to employees in amounts not divisible by 5 cents, to round the payment *up* to the nearest amount divisible by 5 cents. It explicitly states that no rounding is required.
Section 3(c)
Why it matters:This provision is likely placed here to ensure employee protection within the context of new rounding practices, preventing employers from using the general rounding rules to shortchange workers. It's a specific safeguard for a potentially vulnerable group.
Case for: This provision protects employees from potential wage theft or unfair rounding practices. By mandating rounding up, it ensures that if an employer chooses to round, the benefit of that rounding accrues to the employee, aligning with fair labor practices.
Case against: Some employers might view this as an additional specific regulation on their payroll practices, even though rounding itself is optional. However, given the protection it offers employees, widespread opposition is unlikely.
Estimated impact: While the individual impact per employee per payment is minor (a few cents), it ensures fairness and prevents cumulative disadvantage for employees receiving cash wages, potentially affecting millions of transactions annually.
Defines 'covered amount' for the purpose of cash transaction rounding as either the total transaction amount (including taxes) or the amount of change due to the customer if the customer provides a cash payment exceeding the total transaction amount.
Section 3(f)
Why it matters:This is standard legislative practice to define terms used within a specific section, ensuring clarity and consistent application of the law. Its placement is logical for a definitions clause.
Case for: This definition is vital for preventing ambiguity and ensuring consistent application of the rounding rules across all types of cash transactions, whether it's the total bill or the change given back. It provides legal clarity for businesses and consumers.
Case against: There is no substantive case against a clear definition of terms, as it serves to improve the clarity and enforceability of the law.
Estimated impact: Ensures the consistent and fair application of rounding rules across millions of cash transactions daily, preventing disputes and confusion over what amount should be rounded.