States Respond To Penny Pinching With Rounding Legislation

Until recently, passersby may not have bothered to stoop to pick up a penny. That changed when President Donald Trump directed the U.S. Department of the Treasury to stop producing pennies. As we covered in a previous podcast episode and client alert, merchant penny drawers are no longer full, preventing restaurants and other retailers from making change. In the absence of federal enactment and under pressure from merchants, states have begun to respond with legislative solutions and official guidance.

A federal enactment is still possible. The federal Common Cents Act (H.R. 3074), which would permit but not require retailers to round cash transactions to the nearest nickel, has passed the U.S. House of Representatives. Meanwhile, penny rounding laws have been enacted and are effective in Alabama, Arizona, Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Maryland, Nebraska, New Mexico, Oregon, Tennessee, Vermont, Virginia and Washington. Penny rounding legislation is enacted and will become effective in Missouri on August 28, 2026, and Connecticut on January 1, 2027.

Cash transactions ending in 1, 2, 6 or 7 cents may be rounded down, and transactions ending in 3, 4, 8 or 9 cents may be rounded up, each to the nearest nickel, pursuant to most rounding laws. Rounding legislation also commonly addresses intersecting laws. For example, Florida's rounding law enables merchants to round cash transactions to the nearest nickel without liability for deceptive or unfair trade practices. Under Chapter 2026-68, Laws of Florida, rounding cash transactions is discretionary; non-cash transactions are not affected unless cash is disbursed; regardless, sales tax is based on the unrounded purchase price.

Rounding legislation is pending in more states. New York Assembly Bill (AB) A9274A has passed both chambers and is awaiting the governor's signature. Pennsylvania House Bill 2388 has passed the House and advanced to the Senate. California's rounding bill AB 1793 has just begun the legislative approval process. In lieu of legislating, other states have issued rounding guidance, including Colorado, Iowa, Michigan, New Jersey, North Carolina, South Carolina, Texas, Utah and Wisconsin.

Cash discrimination laws and regulations intersect and can conflict with penny rounding laws because they prohibit charging cash-paying customers more than non-cash customers, which is what rounding up causes. Oregon and Connecticut¹ amended their preexisting cash discrimination statutes to carve out penny rounding, but some cash discrimination requirements have been adopted by counties and municipalities.

For example, Miami-Dade Code § 21-60 makes it unlawful for a retailer to "charge a higher price to customers who pay cash than they would pay using any other form of payment." The ordinance includes a self-executing exception for "any transactions which the County is preempted from regulating pursuant to Florida statute."

Unlike Florida's rounding law, the Washington rounding statute explicitly states that the regulation of cash rounding "is a matter of statewide concern" and that the statute "preempts and supersedes any ordinance, regulation, or rule adopted by a local government that prohibits, restricts, penalizes, or otherwise regulates" rounding as the statute authorizes.

Where conflict between penny rounding and other statutes or regulations remains unresolved, retailers should consult with counsel about alternatives to avoid liability, for example, in Miami, New York, Philadelphia, San Francisco, Detroit and Washington, D.C.²

Footnotes

1. Connecticut's rounding statute, Public Act 26-128 (HB 5349), takes effect January 1, 2027. Until the new law is effective, Connecticut state guidance has indicated that the cash discrimination law prohibits rounding up of cash transactions.

2. Some of these jurisdictions, including Philadelphia and D.C., route violations through consumer protection statutes that carry private rights of action and fee-shifting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.