With pennies no longer being minted, attention is shifting to the five-cent piece. Could the humble nickel be far behind?
Researchers at the Federal Reserve Bank of Richmond examined that question in a 2025 paper. “With the penny being retired, attention may soon turn to the nickel,” wrote Zhu Wang and Russell Wong. The economics are stark: a penny costs nearly 4 cents to produce, while a nickel costs almost 14 cents — making the nickel even more inefficient than the penny it outlived.
The U.S. Mint previously spent roughly $85 million annually producing pennies that Americans largely ignored or discarded. A 2022 Federal Reserve study found that about 60 percent of coins in circulation ended up stored in jars and piggy banks rather than in use. Americans also toss roughly $68 million in coins in the trash each year, compounding the production cycle.
Other nations moved ahead of the United States on this issue. Australia, Canada, New Zealand and Sweden have all eliminated their lowest-denomination coins. Sweden went further, phasing out all coins below the krona in 1972. Some countries maintain scrapped coins as legal tender, while others set exchange deadlines before revoking their currency status.
The Case for Keeping the Nickel
Eliminating the nickel alongside the penny could trigger a “rounding tax” — the additional cents consumers pay to reach the nearest five-cent increment. Wang and Wong estimated this could cost around $56 million annually. Wang noted the figure represents an upper bound, but warned that cash-dependent consumers without bank accounts could bear disproportionate harm.
Economic fundamentals suggest the nickel has time left. “The major reason for keeping the nickel is that people continue to use it,” said Robert Whaples, an economics professor at Wake Forest University. The penny was retired because consumers stopped bending to pick one up and stopped returning them to stores. The same threshold has not been crossed for nickels.
Inflation will eventually tip the balance. “The key driver is inflation, which makes the penny or nickel less and less valuable over time,” Whaples said. At a 3 percent annual inflation rate, a nickel’s real value halves roughly every 25 years.
The nickel’s future ultimately hinges on usage patterns. As long as Americans continue engaging with the coin in everyday transactions, it is likely to remain in circulation — even if the economics say otherwise.