(INDIANA CAPITAL CHRONICLE) — Indiana lawmakers are crafting statewide penny-rounding policies as Hoosier retailers struggle through a nationwide shortage of the discontinued coin — but admit it needs more work. State revenues could also suffer.

Merchants large and small are rounding to the nearest nickel or down in favor of customers. Some are rounding the total transaction and others the change owed.

“It’s just kind of been all over the board right now,” said Melissa Coxey, leader of the Indiana Retail Council. Her members sell products and services directly to consumers.

“They have to take matters into their own hands, because absent any other direction, I mean, there’s nothing they can do. There just aren’t any pennies,” she said.

The U.S. Mint struck its final non-ceremonial penny in November, ending a 232-year run. President Donald Trump cited the penny’s high production cost in directing the stoppage.

The U.S. Treasury has estimated 114 billion of the coins remain in circulation, while the Mint has offered a 300 billion estimate — “far exceeding the amount needed for commerce.”

But Indiana retailers are reporting strain.

“Running out of pennies happened faster than anyone anticipated,” Coxey said. “… They’re just gone.”

Bipartisan rounding bills in the U.S. House and Senate have not moved.

Now, Indiana lawmakers are giving it a shot.

“We have been plagued with coming up with a solution to the penny phase-out and I’m not sure we got it right, just to be quite honest with this committee,” said Sen. Travis Holdman, the author of Senate Bill 243, this month. The wide-ranging tax bill also hosts penny talk.

Making cents

Holdman, R-Markle, amended three penny provisions into the 147-page bill during a Senate committee meeting in January. It later moved to the House on a 47-1 vote.

One, dealing with cash retail transactions, would require merchants to calculate sales tax on unrounded totals, then round the tax amounts down to the nickel. Taxes, fees and fines paid in cash to state and local units of government would also be rounded down.

But for cash payments to business entities — excluding retail transactions — the bill sets up “symmetrical” rounding rules. Totals, rather than taxes alone, would be rounded down when they end in 1, 2, 6 or 7 cents, and up when they end in 3, 4, 8 or 9 cents.

“We round down on all taxes, fees and fines, and we round to the nearest nickel or dime (otherwise),” Holdman said at last month’s meeting.

But, Coxey said, “It does not solve the problem.”

If the tax alone is rounded down and added to an unrounded subtotal, the final result could still require pennies.

Coxey’s organization and others, including the Indiana Chamber of Commerce, are instead calling for the rounding to occur as the last step.

“When you’re at the grocery they’re typically not asking you if you’re paying with cash or credit card or a different form of payment prior to ringing up the transaction,” said Natalie Goodwin, the chamber’s vice president of government affairs. “So that’s why, again, it’s important to make sure that all of this rounding is happening on a final transaction.”

“If you were attempting to round at any point before that based on, you know, if someone’s paying part credit, part cash, part gift card … we just think it introduces a lot of uncertainty to handle it that way,” she said.

The Treasury, in December non-binding guidance, has also recommended last-step rounding — as has the National Conference of State Legislatures.

“Taxes should be added to the pre-rounded total and then the final amount should be rounded symmetrically,” a November policy brief reads. “This approach ensures that the exact tax owed is always paid and that, over time, consumers and retailers each ‘win’ roughly half the time. Such balance is critical to maintaining trust and avoiding perceptions of bias or manipulation.”

Indiana groups also seek flexibility on rounding to the nearest nickel or down, rounding the total versus the change returned, and even the option to give exact change when pennies are in stock instead of rounding.

“The language is, hopefully, it should be written in a permissive way, so that if you do not have access to the penny, these are the steps you can take,” Goodwin said. “But if you do have pennies, you can continue to use them.”

The penny is still legal tender — an acceptable form of payment.

The bill was heard in the House’s Ways and Means panel last week, and is scheduled for amendments and a committee vote today.

“We just keep getting more advice from other groups (about) what we’re going to do,” Holdman told the Capital Chronicle on Thursday. “Monday, we should have arrived at something.”

Other considerations

Further guidance may be needed.

The National Conference of State Legislatures, of which every state lawmaker and legislative staffer are part, additionally recommended giving directions for handling split-tender transactions, what should be reflected on receipts or records, and more.

The policy brief also emphasized the importance of training for government and retail employees, along with clear state communication to customers.

Utah, for instance, has published a rounding guide for businesses, complete with an illustrated flyer to print and post in stores.

“It’s a concern for everyone, you know, how to communicate this to customers why it’s happening,” Coxey said.

As written, the penny provisions would take effect in 2027.

Businesses say that’s too far out.

“The sooner we can provide this certainty to the retailers and the business community, and consumers, at large, the better,” Goodwin said.

That’s despite the work it will take to implement. Point-of-sale systems will require reprogramming to round to the nickel, when applicable.

State losses

The state’s round-down approach, meanwhile, carries a price tag.

Per-transaction losses of 1 cent to 4 cents will add up. Indiana could lose between $1.8 million and $3.5 million in sales tax revenue annually, according to the State Budget Agency.

“It’s the sheer number of transactions that you’re talking about, is what’s going to cause that loss,” Budget Director Chad Ranney said. “Sales tax, you’ve got to remember, is by far one of the largest tax bases we have … It could add up pretty quickly.”

But the amount is “not super material.”

Indiana earned more than $10 billion off the sales tax in the 2025 fiscal year, which ended last June, according to SBA revenue reporting. Collections are expected to top $11 billion in the 2026 fiscal year, according to an agency revenue forecast.

And any month’s forecast miss would be hard to pin on rounding alone, Ranney said.

SBA also estimates state agencies will lose out on between $60,000 to $120,000 by rounding down on their fees, fines and miscellaneous charges. Mostly dedicated funds would be hit.

Agencies told the Capital Chronicle they’ve got it covered.

Cash makes up more than 40% of transactions on state park properties: gate fees, firewood sales, boat rentals and so on. But prices are largely tax-inclusive whole-dollar amounts, Department of Natural Resources spokeswoman Holly Lawson said.

At the White River State Park in Indianapolis, the visitor center and concert venue are cashless. The campus also hosts the Indiana State Museum, which accepts cash at the IMAX theater, said park spokeswoman Abigail Billing.

“We are in the process of converting pricing to be tax-inclusive to avoid issues caused by the discontinuation of the penny,” she said.

Museum spokeswoman Carla Knapp said visitors are encourages to use exact change, but if pennies are unavailable, “we will round up change amounts to the nearest nickel.” 

“While the policy is in effect, we have pennies available currently and no transactions have been impacted to this point,” Knapp said.

Most transactions at the Indiana State Fair are digital. Coin usage is even more “minimal” because of whole-dollar pricing, said Anna Whelchel, chief revenue and marketing officer.

Hoosier Lottery tickets are also generally sold in whole-dollar increments, except for two games that can be purchased in 50-cent increments, according to spokesman Jared Bond. None of the lottery’s products are subject to sales tax, so totals will never require rounding.