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Penny Shortage
Due to rising costs of production, the U.S. Treasury stopped minting pennies on
November 12, 2025. Although over 100 billion pennies are in circulation, penny
shortages are already occurring with cash transactions at some retail establishments.
When giving change back to their customers in cash transactions, retailers may need to
round to the nearest nickel. However, any rounding must not impact the calculation of
the 6% Kentucky sales and use tax because, regardless of the form of payment, the tax
must be calculated to the nearest penny as required under KRS 139.230.
If rounding is needed, the department recommends using standard rounding rules in the
example below. Please note that rounding occurs only after the calculation of the sales
tax.
The standard rounding rules are:
- If the last digit is 1, 2, 6, or 7 cents - round down to the nearest nickel; and
- If the last digit is 3, 4, 8 or 9 cents - round up to nearest nickel.
This method is likely the fairest overall for both retailers and customers.
Taxable Item 1
| $1.99
|
Taxable Item 2
| $2.39 |
Nontaxable Item 1
| $4.99 |
Nontaxable Item 2
| $3.99 |
Subtotal:
| $13.36 |
Sales Tax Due ($4.38 x 6%):
| $0.26 |
Total Transaction Amount:
| $13.62 |
Rounding for Cash Payment:
| ($0.02) |
Cash Amount Due:
| $13.60
|
Again, non-cash transactions as well as the remittance of sales tax to the Department of
Revenue should not be impacted by the shortage. The sales tax liability on all retail
sales transactions must be calculated to the nearest penny.
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