A penny saved: Washington lawmakers approve new rules as use of 1-cent coin declines

OLYMPIA – Gov. Bob Ferguson finalized a new law so cash transactions still make cents after the federal government stopped minting new pennies last year.

Ferguson signed legislation Monday that will require that cash transactions be rounded up or down to the nearest nickel. The change was made in response to the end of penny production by the U.S. Mint late last year, prompting concerns of an impending shortage.

The rule establishes when businesses should round up or down to the nearest 5-cent increment for cash transactions.

“This important bill provides predictability for consumers and clear guidance for businesses,” Ferguson said.

While pennies still will be accepted and circulated, the availability of the coin is expected to dwindle over time. Still, the Mint has left state and local jurisdictions to decide how best to handle the declining availability of the coin.

The law mirrors what Canada did after that country’s mint stopped making pennies in 2012. Several states are considering similar legislation, while the U.S. Postal Service and many businesses already have adopted the practice.

The change only impacts cash payments. Online transactions and credit and debit card payments would not be impacted by the law. The transaction would be rounded either up or down on the final total of a transaction after all other taxes and fees have been implemented.

Totals that end in either 1 or 2 cents will round down to 0, while totals that end in 3, 4, 6, or 7 cents will round to 5. Totals that end in 8 or 9 cents round up to 10 cents.

“When the federal government stopped producing pennies, it left states and businesses without clear rules for how to handle cash transactions,” sponsor April Berg, D-Mill Creek, said in a statement after the legislation passed the state Senate earlier this month. “This bill ensures a smooth transition by creating a straightforward, fair system for rounding cash payments while protecting consumers and reducing confusion for businesses.”

Electronic payments, credit cards, and other noncash transactions will not be affected by the new law.

“Without clear rules, businesses are left guessing and customers can experience inconsistent pricing,” Berg said. “By codifying a simple rounding system in state law, we can prevent confusion, reduce small transaction errors, and help businesses adapt to this federal change.”

The change will take effect in mid-June.