Making a Penny Costs the US Mint More Than a Penny

The US Mint has been making pennies at a loss every year since 2006. In its 2023 annual report, the unit cost for a one-cent coin came in at 3.07 cents — more than three times its face value.

The coin is mostly zinc. A penny is 2.5 percent copper plating over a zinc core, and zinc prices jumped with everything else after 2020. Add manufacturing, distribution, and administrative overhead, and the Mint reported a $93 million loss on the penny alone in fiscal 2023. The nickel lost another $92 million.

The economics only work because the Mint also prints quarters. A quarter costs about 14 cents to make and sells to the Federal Reserve for 25. The seigniorage profit on the higher denominations — about $250 million in 2023 — is what keeps the whole operation in the black.

Canada stopped making its penny in 2013. Cash transactions round to the nearest five cents at checkout. The government projected $11 million a year in savings and reported no serious disruption. Australia and New Zealand had already dropped their one- and two-cent coins decades earlier.

Bills to kill the US penny have been introduced repeatedly since the 1990s and never passed. The sticking point is rarely economics. It's the zinc lobby, sentimentality about Lincoln, and a persistent worry that retailers would round up.