The Tennessee House of Representatives has approved legislation that would allow businesses to round cash payments to the nearest five cents as the U.S. phases out production of the penny.
House Bill 1744, sponsored by State Rep. Charlie Baum, R-Murfreesboro, permits private businesses and financial institutions to round cash transactions up or down to the nearest nickel when exact change is not available.
Baum said the measure is designed to provide clarity and consumer protection as currency production changes, establishing a uniform and transparent rounding system in state law while shielding businesses that follow it.
The proposal follows action by the United States Mint, which struck its final pennies in November under an order from Donald Trump after reporting an $85.3 million loss on penny production in fiscal year 2024.
Under the bill, rounding would apply only to cash transactions and only when exact change is unavailable. Electronic payments would not be affected.
The legislation sets a specific formula based on the ending amount of a transaction:
- Totals ending in $0.01 or $0.02 would be rounded down to the nearest five cents.
- Totals ending in $0.03 or $0.04 would be rounded up to the nearest five cents.
- Totals ending in $0.06 or $0.07 would be rounded down to the nearest five cents.
- Totals ending in $0.08 or $0.09 would be rounded up to the nearest five cents.
Businesses would still be required to calculate and report sales tax to the penny.
A companion measure continues to move through the state Senate. If approved, the legislation would head to the desk of Gov. Bill Lee for consideration.
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