The Penny Is Going Away. Here is How AlpacaBoss Will Handle It.

The U.S. Treasury has stopped minting pennies. The final blanks were ordered in May 2025, production wound down in early 2026, and while the estimated 114 billion pennies already out there remain legal tender, they are slowly draining out of circulation. As tills run dry, cash transactions will need to round to the nearest nickel, just like Canada has done since it retired its penny in 2013.

We are building nickel rounding into AlpacaBoss right now. It started as a build for one of our church customers, and it will be available as an option for everyone soon. Here is exactly how it will work, and why the details matter more than you might think.

The one rule that matters: round the cash, never the sale

Rounding happens only on cash tender, and only on the grand total. The sequence follows the proven Canadian model:

1. Sum the line items.

2. Apply tax to the true subtotal.

3. Get the exact total, to the cent.

4. If and only if the customer pays cash, round that final total to the nearest nickel.

Card, debit, ACH, and check all settle to the exact cent — no rounding, ever. That means a single item can ring up at two different amounts depending on how the customer pays. That is fine, and it is by design - the recorded sale and the recorded tax are identical either way.

Why tax has to stay untouched

Tax is calculated on the real, pre-rounding subtotal at the statutory rate. You never round the subtotal to a nickel before taxing, and you never round the tax line to a nickel. The taxable base is the actual selling price.

This is the part a naive POS implementation gets wrong. If you round the total and then back-derive the tax from it, or apply nickel rounding to the tax line itself, you create a reconciliation mess with the state — and you end up remitting the wrong number. Your tax payable to the state is always the sum of the exact tax lines, full stop.

To see why back-deriving goes wrong, take the $7.23 item from the table below. Done correctly, the sale is $7.23 and the tax is $0.49, whether the customer pays by card ($7.72) or cash ($7.70). But if the system instead takes the rounded $7.70 and works backwards — dividing by 1.0675 to split it into "sale" and "tax" — it records a sale of $7.21 and taxes a base that never existed.

Now the same item on the same shelf generates two different sale amounts depending on how the customer happened to pay, your reported gross receipts drift away from your actual sales, and when the state audits by multiplying your receipts by the statutory rate, the numbers do not tie out. Keeping the tax anchored to the real selling price means the rounding difference lives in exactly one place — the rounding account — instead of leaking into every line of your tax report.

The discrepancy is real — but it's yours, not the state's

The gap between the exact total and the rounded cash-due amount is a merchant rounding gain or loss. In AlpacaBoss it gets booked to a dedicated account (think "Cash Rounding" or "Over/Short - Rounding"), completely separate from your tax liability account.

Over enough transactions the rounding nets out close to zero - some go up, some go down. But you track every penny of it so your drawer reconciles and your P&L absorbs the difference cleanly.

The numbers, worked out

Here are exact figures at a 6.75% tax rate. "Exact Total" is what a card customer pays and what hits your books; "Cash Due" is what a cash customer physically hands over; "Adj" is the rounding entry.

Cart	Subtotal	Tax (6.75%)	Exact Total	Cash Due	Rounding Adj
$0.99 item	$0.99	$0.07	$1.06	$1.05	−$0.01
$4.99 item	$4.99	$0.34	$5.33	$5.35	+$0.02
$7.23 item	$7.23	$0.49	$7.72	$7.70	−$0.02
$12.49 item	$12.49	$0.84	$13.33	$13.35	+$0.02
$19.95 item	$19.95	$1.35	$21.30	$21.30	$0.00
$3.50 + $2.25 + $1.10	$6.85	$0.46	$7.31	$7.30	−$0.01
$14.00 + $6.66	$20.66	$1.39	$22.05	$22.05	$0.00

Walking through the $4.99 row: subtotal is $4.99, tax is 4.99 × 0.0675 = 0.336825, rounded half-up to $0.34, for an exact total of $5.33. A card customer pays $5.33. A cash customer's total rounds to $5.35 (a total ending in .33 is closer to .35 than to .30), so they hand over $5.35, and you book a +$0.02 rounding gain. In both cases the sale on your books is $4.99 and the tax you owe the state is $0.34.

The rounding rule, for completeness

For the nickel step:

• Totals ending in 1¢ or 2¢ round down to the nearest nickel

• Totals ending in 3¢ or 4¢ round up

• Totals ending in 6¢ or 7¢ round down to 5¢

• Totals ending in 8¢ or 9¢ round up to 10¢

• Multiples of 5¢ are untouched

This symmetrical rounding is the approach recommended in the National Conference of State Legislatures' guidance on penny elimination, and it's what Canada, Australia, and New Zealand have used for years. Over time, it's fair to everyone.

What you need to do

Nothing yet. When the option ships, you'll be able to switch it on in your AlpacaBoss settings, and everything above happens automatically: exact tax, exact card totals, correctly rounded cash totals, and a clean rounding account your bookkeeper will thank you for.

Until then, business as usual. The nickel rule only steps in when the pennies finally run out, and when they do, your numbers will still balance to the cent while half the POS systems out there are quietly remitting the wrong tax.

See how AlpacaBoss handles the penny phase-out, and everything else your front counter throws at it. When the last penny leaves your drawer, your books will still balance to the cent. That's the AlpacaBoss difference.

Get a demo today